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A car financier has been fined and ordered to pay back customers who were wrongly charged when they took out loans.
The Commerce Commission said the partners of Auckland-based car financier Dolbak Finance have been fined $100,000 over car loan contracts that did not properly disclose fees and charges.
In Auckland District Court, David Dolbel pleaded guilty to 22 charges of breaching the Credit Contracts and Consumer Finance Act and was fined $49,500. Anthony Baker pleaded guilty to 22 charges and was fined $50,500.
The pair has also been ordered to pay $46,600 to customers in statutory damages, meaning 100 borrowers will receive damages of around 5 per cent of their total loan. The payments range from $200 to $1000, depending how much was borrowed.
"It is crucial that borrowers get full and accurate information when entering into a loan contract," said the commission's director of fair trading Deborah Battell.
Customers weren't told about a $5 fee per warning letter if a payment was missed, a $20 fee for sending out a repossession notice, or a $75 fee for preparing a repossession authority.
The commission told Dolbak twice that it was not providing the information required by law, but was ignored.
Approximately 100 contracts were entered into when customers bought second-hand cars from Fleetz Wholesale Cars Ltd in Penrose between April 2005 and June 2006.
Dolbel and Baker admitted breaching the Credit Contracts and Consumer Finance Act by not telling customers what fees and charges applied, how interest was calculated, or how to pay the loan off early.
They were also in breach for not sending a copy of the contract to those who acted as guarantors of the loans and for wrongly showing interest in advance on the borrowers' accounts, rather than showing the interest only when it had been accrued.
Dolbel and Baker also admitted breaching the Fair Trading Act by threatening to repossess nine vehicles when loan payments had not been made.
Credit contracts can only be enforced if they comply with the CCCF Act, so Dolbak had no right to repossess the vehicles.
The companies worked from premises at 49 O'Rorke Road, Penrose.
- NZPA
