Two Christchurch finance companies must pay $124,737 for listing prohibited household goods as security under their credit contracts.
The Christchurch District Court was told that although the items were listed in the terms of the contracts, none of the prohibited items were ever repossessed.
Judge Josephine Bouchier imposed fines totalling $103,500 and statutory damages of $21,237.
The Act lists a fine of $600,000 as the maximum penalty.
The director of both companies is David Diggs, of Christchurch, who presented what the defence counsel described as a “contrition statement” to the court ahead of the sentencing. He apologised to customers for any statements that may have misled them.
Judge Bouchier was told that he was active in work that supported the community.
In submissions, the companies said the error in the contracts was careless rather than wilful. Defence counsel John Katz QC said there had been no repossessions and there was no evidence before the court of any harm having been done.
He told the court: “The harm can only be the perception by borrowers that their prohibited goods were at risk.”
Alternative Finance Limited, of Mairehau, and Crester Credit Company Limited, had each pleaded guilty to four charges of entering into deceptive consumer credit contracts. The Commerce Commission said the contracts were likely to mislead people into believing the companies could repossess and sell such items as beds, cooking equipment, washing machines, and refrigerators, if contracts were defaulted.
The items were listed as collateral although they were prohibited items under a change in the Credit Contracts and Consumer Finance Act.
Judge Bouchier said the Commission viewed the companies’ actions as involving a high degree of carelessness over about a year. The Commission said people borrowing from third tier lenders such as these companies were likely to be vulnerable individuals who needed greatest protection.
She said Cresta Credit was a family business which had been operating for about 30 years. It loaned relatively small amounts of finance to assist borrowers on a short term basis.