Finance company fined for its part in toxic water claims investigation
Auckland-based finance company Tiny Terms Ltd has been fined $77,200 in the Auckland District Court today for its part in the door to door sale of water filters by Love Springs Ltd.
Tiny Terms provided finance for the purchase of Love Springs’ water filters. Consumers who agreed to buy water filters were signed up to wo-year rent-to-own agreements.
As a creditor Tiny Terms was required to disclose information about the terms of the contract to debtors and to do so in a manner that could be clearly and easily understood. Tiny Terms failed to do this and as a result breached sections 17 and 32 of the Credit Contracts and Consumer Finance Act 2003. Tiny Terms also breached the Fair Trading Act by trying to enforce these contracts where it had no right to do so because of its inadequate disclosure.
Between July 2009 and December 2010, Tiny Terms entered into a total of 21,523 credit contracts and each of those credit contracts was for $1,595.
Commerce Commission Head of Investigations Ritchie Hutton said today’s sentencing sends out a strong message to both consumers and creditors.
“It is important that consumers understand the cost of buying goods on credit. Creditors must provide information to consumers about their credit contracts to help them do this and this information must be set out clearly. Where creditors, such as Tiny Terms do not do this they can expect to face significant penalties.”
“This brings to a close a very successful investigation involving Tiny Terms, Love Springs and Phillip Smart,” said Mr Hutton.
In December 2013, Love Springs and its director Phillip Smart were fined a total of $555,000 after Love Springs sales staff were trained to sell water filters using deliberate marketing tactics that took advantage of people’s fears about their health. As a result sales staff told consumers that local drinking water could cause cancer, birth defects and miscarriages and was dangerous to people’s health.