Consumer action on unfair car leases

CFA member Consumer Action Law Centre has won an important case in the Victorian Consumer and Administrative Tribunal who found that Motor Finance Wizard’s leasing practices were ‘unfair’ and ‘seriously flawed’. In CALC’s words

On 12 May 2011, the Victorian Civil and Administrative Tribunal (VCAT) ordered Motor Finance Wizard to cancel a car lease contract with a vulnerable customer, refund her money and clear her credit report.  The decision, made after Consumer Action Law Centre issued legal proceedings against one of the Motor Finance Wizard group of companies, DGTV1 Pty Ltd, on behalf of the customer, formally found that the company’s contract was unjust, its conduct was misleading or deceptive and unconscionable, the finalisation amount was a penalty and therefore unenforceable and its entire leasing process was seriously flawed.

Consumer Action receives numerous consumer complaints about Motor Finance Wizard and the unfair practices used against the customer in this case seem to be repeat conduct.  There is now a serious question whether the company should be granted the credit licence it requires to continue trading.

The Federal Government’s framework for consumer lending, leasing and broking requires ASIC to assess certain matters before it may grant a credit licence, including whether it has any reason to believe that the licence applicant is likely to contravene the consumer credit laws or to believe that the person is not a fit and proper person. This case was brought in VCAT under the former State-based consumer lending laws (and general fair trading laws), but the relevant parts of the law remain similar or the same under the new national laws.

This decision clearly found that the company’s entire leasing process should be redesigned and that it engaged in practices contrary to the consumer credit laws which are there to protect consumers from this kind of sharp practice.  Our question is  – if this company’s leasing process is so flawed and contrary to consumer credit law, should they really be granted a licence which will allow them to keep leasing?

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