KEY POINTS:
Troubled finance company Geneva Finance Ltd has been done for overcharging customers and has paid $588,114 back to them.
The company said today it has refunded the money to more than 900 customers, admitting a breach of the Fair Trading Act and reaching an out-of-court settlement with the Commerce Commission.
The company, which has struggled to repay its own debenture holders, had overcharging interest and fees when customers defaulted and security items like cars were repossessed, the Commission contended.
Under the Credit Repossessions Act, an outstanding debt becomes crystallised once a repossessed item is sold and the sales proceeds are credited to the loan. The creditor cannot recover interest and credit fees on the remaining outstanding debt.
Geneva Finance misrepresented that the additional interest and fees were due when it sent statements and or reminder letters to those customers affected by the breach, according to the Commission.
The refunds were completed in June. In one case, a customer received a credit of $707.56 after Geneva Finance charged penalty interest and fees to his account for a year.
"Once the commission began investigating this issue, Geneva Finance moved quickly to review all relevant accounts and took immediate action to refund these charges and put in place measures to prevent the same breaches from happening again," commission chairwoman Paula Rebstock said.
"We expect others in the industry to ensure they are not overcharging customers who have defaulted on their loans. Although they may have defaulted, these customers still have legal rights that cannot be ignored or avoided by finance companies," said Ms Rebstock.
As part of its lending criteria. Geneva Finance used motor vehicles and household chattels as securities for consumer credit contracts.
Geneva Finance said last week that it was closing its branches and laying off staff, but said it would continue to lend through a direct lending centre and mobile managers.
The company, which defaulted on debenture repayments earlier this month, is seeking approval for a loan moratorium as it struggles with a lack of cash and tries to stabilise its position.
Geneva mainly offers hire purchase for consumer goods and cars, personal and small business loans.
- NZPA
