$115k fine for CCCFA breaches
El Cheapo Cars has been fined $115,000 for failing to provide key information to borrowers about their loans.
The Wellington-based dealer and finance lender pleaded guilty to seven charges the Commerce Commission filed under the Credit Contracts and Consumer Finance Act (CCCFA).
In addition to the fine, the company has been ordered to pay $341,931 in compensation to hundreds of affected borrowers.
Vanessa Horne, the regulator’s general manager for competition, fair trading and credit, says protecting vulnerable consumer groups is a core priority for the commission, which made this case particularly important.
“One of the commission’s enforcement priorities is to take action when we consider motor-vehicle finance lenders have not met their obligations under the CCCFA,” she says.
“We are particularly focused on lenders who are providing credit to vulnerable consumers. For many Kiwis the purchase of a car is one of the biggest financial commitments they will make.
“The CCCFA is there to protect consumers when they borrow money or buy goods on credit and, under the CCCFA, consumers have a right to be provided with upfront information about any changes to their loans.”
El Cheapo Cars breached its variation disclosure obligations under the CCCFA when providing personal and vehicle finance to borrowers between 2015 and 2021.
In his sentencing notes at Porirua District Court, Judge Sainsbury emphasised that “disclosure obligations are among the most fundamental protections under the CCCFA, particularly those related to ensuring consumers are aware of their rights and obligations under the consumer credit contract.”
The judge emphasised: “The importance of lenders adhering to disclosure requirements is undeniable.”
Horne says: “The commission considers this to be a win for consumers and borrowers affected by El Cheapo’s failures, who may be entitled to compensation.
“This case should send a strong signal to motor-vehicle financiers that non-compliance with disclosure obligations will not be tolerated. Transparency and accountability are fundamental to responsible lending, and are key to building consumer trust and upholding market integrity.”
Borrowers who had a loan with El Cheapo Cars which was varied between 2015 and 2021 may be eligible for compensation. The commission will be reaching out to affected parties shortly.
The commission opened its investigation into the company in October 2021 following a customer complaint.
It has also filed civil proceedings against Go Car Finance and Second Chance Finance in the high court with allegations that both lenders also breached the CCCFA when providing car finance to borrowers.
