After a protracted legal battle, car dealer Foton Dandenong has been found to have broken the Australian Consumer Law by selling a defective car. An associated company, All Loans R Us financed the purchase, and was found to have engaged in unlicensed credit activity and to have provided the consumer with an illegally high-cost and unfair loan.
The dispute began when Foton Dandenong sold Ms Skye Whiteman a car she later discovered had defective shock absorbers. Foton also refused to replace the car’s tyres as promised. The matter was further complicated when it became evident that car was purchased using a loan from All Loans R Us when it wasn’t licensed to sell credit, and whose contract contained unreasonable fees and an illegal interest rate.
The Magistrates Court found in favour of Ms Whiteman in October 2013 but a fruitless Supreme Court appeal from Foton and All Loans R Us has meant Ms Whiteman has been waiting well over a year to receive compensation.
Gerard Brody, CEO of Consumer Action Law Centre, which represented Ms Whiteman, said the case was notable because their client has been stitched up by two traders in the one deal. ‘Ms Whiteman was sold a dodgy car and a dodgy loan to go with it. I wish I could say it was bad luck but, unfortunately, car dealers and credit providers often work together. And when the customer is on a low income they can end up with a poor quality car and an expensive loan.’
‘What’s unique about this case is not only was Ms Whiteman given an unjust loan, but it came from a company that wasn’t even licensed to provide credit.’
Mr Brody said the fact that two related entities broke the law in the same transaction warranted further action from both the Australian Securities and Investment Commission (ASIC) and Consumer Affairs Victoria.
‘We’ve helped Ms Whiteman get out of her contract but who knows how many others have been given illegal loans? Where there is evidence of unlicensed lending, ASIC should investigate and take the necessary enforcement action,’ said Mr Brody.
‘We’d also encourage Consumer Affairs Victoria to take a close look at Foton Dandenong which has a motor car trading licence. It has sold a lemon of a car and the purchase has been funded by a linked lender which was selling credit without a licence. That’s unacceptable, and we encourage Consumer Affairs to investigate,’ said Mr Brody.
Note: In September 2014 the Supreme Court dismissed the companies’ application to appeal out of time against the Magistrates’ Court finding of October 2013.