After a protracted legal battle, car dealer Foton Dandenong has been found to have broken 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 Skye Whiteman a car she later discovered had defective shock absorbers. Foton also refused to replace the car’s tyres as promised, according to a statement by the Consumer Action Law Centre (CALC).
The matter was further complicated when it became evident that car was purchased using a loan from All Loans R Us, which wasn’t licensed to sell credit, and whose contract contained unreasonable fees and an illegal interest rate.
The Magistrates Court found in favour of Whiteman in October 2013 but a fruitless Supreme Court appeal from Foton and All Loans R Us has meant Whiteman has been waiting well over a year to receive compensation.
Gerard Brody, chief executive officer of CALC, which represented Whiteman, says the case was notable because their client had 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,” Brody says.
“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.”
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,” Brody adds.
“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.”
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