Budget Loans Ltd has been pinged for misrepresenting its rights and charging fees to debtors in a loan book it purchased.
Budget Loans pleaded guilty to 34 charges of breaching the Fair Trading Act in the Auckland District Court yesterday, according to the Commerce Commission. It was fined $30,750.
WhenBudget Loans took over National Finance 2000 Ltd's loan book in 2006, it sent a welcome letter to National Finance's debtors advising them that their loan was now owned by Budget Loans. Debtors who received the welcome letter were charged a $15 fee.
The commission said creditors cannot charge fees that have not been disclosed under the Credit Contracts and Consumer Finance Act.
"The $15 'welcome letter' fee was not disclosed before it was charged and Budget Loans therefore misled debtors by representing that it was entitled to charge the fee, when it was not," said Graham Gill, the commission's enforcement manager for Auckland.
Budget Loans also misrepresented, in contracts, settlement statements, notices and letters sent to some debtors, that it was entitled to continue to charge interest and fees after it had repossessed and sold consumer goods and applied the proceeds to the outstanding balance of the debt.
