Case Studies
The casework service provides ongoing assistance to a smaller number of consumers than does our advice service.
Typically, a casework matter will involve obtaining sufficient details from the client, seeking and reviewing the contracts and documents involved, undertaking legal research, advising clients of rights and options and negotiating with credit providers, debt collectors and financial institutions. In some cases CCLSWA will be involved in issuing or defending legal proceedings or using a private dispute resolution scheme.
Our casework service also gathers valuable information on industry policies and practices and the law that will be relevant for other caseworkers. We disseminate the information widely to other consumer advocates and caseworkers, including financial counsellors through our newsletter.
Our resources are limited and it is not possible for the casework service to take on every matter that is referred to it. We have a number of criteria to enable us to decide whether to act in a matter. The criteria include: low income or disadvantaged client, merit, banking, credit or financial services matter, availability of other sources of assistance, no conflict of interest and resource capacity.
Casework Areas
Traditionally our casework has always focused on the areas of consumer credit, banking and related financial services for consumers in Western Australia. We also aim to identify particular casework issues that have a strategic importance beyond the impact on a particular client. Our casework service informs our policy and law reform work and helps define the topics we undertake in our community legal education, and using casework strategically can increase the broader impact of our work. In addition, it is extremely difficult to even begin to meet the demand for our casework service, and it is therefore important that the matters that we can run have, wherever possible, a broader impact on consumers generally.
The case studies that follow highlight some of the trends and issues that have emerged as well as the matters that have been the bread and butter of the casework service and illustrate the ways in which we can assist clients to obtain redress.
Case Study 1 Consumer Credit Insurance
The client purchased a vehicle using consumer credit. The loan contract also included finance for consumer credit insurance. The client suffered work-related injuries in August 1999 and her car loan repayments were covered by the consumer credit insurer until May 2001. At that point, the insurer refused to continue the 'Disablement" cover and advised her to lodge a new claim under "Unemployment" cover. Swann Insurance took several months to process the new claim before informing the client her claim was refused as her policy did not cover unemployment.
The client's vehicle was subsequently repossessed, as she no longer had sufficient resources to continue repayments.
CCLSWA obtained an extension of time prior to the disposal of the vehicle to enable it to obtain documents and investigate. Negotiations with the insurer resulted in the payment of a lump sum corresponding to a 90-day period, a total of $1,440, as settlement for wrong advice and undue delays in processing the claim.
Case Study 2 Electronic Funds Transfer
The client's credit card was stolen and several cash withdrawals were made at ATM's with the client's correct PIN number. The credit provider assumed that the client had written down the PIN and kept it together with the card and found that the client should bear the cost of $915 as they had contributed to the loss. The client denied that they had kept a record of the PIN.
The client was referred to CCLSWA by the Department of Consumer and Employment Protection.
CCLSWA pointed out to the credit provider that the fact that the card had been accessed with the correct PIN was not conclusive evidence that the client had contributed to the loss. Furthermore, CCLSWA was also able to argue that a new form of credit card fraud, known as 'skimming', had recently emerged and could explain the cash withdrawals with the correct PIN.
The client was released from all liability.
Case Study 3 Fuel Card Providers
The client entered into a continuing credit arrangment to install a gas system in his vehicle and fund gas purchases. The client terminated the continuing credit arrangement and the fuel card provider sought to debit his bank account. This was unsuccessful and the client was issued with a Notice of Default for $1,183.40, giving the client 7 days to remedy the default. This was followed almost immediately by an invoice from a debt collector for $1,346.87.
CCLSWA investigated and negotiated with the credit provider relating to the enforcement expenses. CCLSWA argued that the Notice of Default did not comply with the Consumer Credit Code which required the credit provider to give the borrower 30 days to remedy a default. Therefore, subsequent enforcement proceddings and expenses were invalid.
The credit provider agreed to reverse the debt recovery process and waive the enforcement expenses of $163.00.
Case Study 4 Motor Vehicle Finance
Our clients agreed to enter into a transaction with a car dealership to trade in 2 Ford Falcons and purchase a van that would be large enough to transport them and their 6 foster children. The van had been advertised for $16,990 and the clients thought that the total amount financed would be $27,500 taking into account payouts on the 2 Ford Falcons. The car dealer referred the clients to a finance broker who obtained finance for them with a credit union. The first two pages of the loan contract presented to them to sign were blank and when the clients eventually received a copy of the loan contract in the mail it showed the purchase price of the van to be $27,500, and they had been given a loan for $37,388.38. In addition, the clients discovered that they had paid $1040 for insurance which they had not been told about. At the time of signing the loan contract the clients were also asked to sign an "Equitable Charge to Support Lodging of Caveat". The clients did not understand what a caveat was or its consequences.
Soon after taking delivery of the van the clients were advised that the vehicle was unroadworthy and that they should not drive it. Necessary repairs were estimated at $12,000.
CCLSWA negotiated with the credit union and then referred the case to the Credit Union Ombudsman. CCLSWA argued that, there were wholesale breaches of disclosure provisions of the Consumer Credit Code by requiring the clients to sign a blank loan contract, the latterly completed form of the contract did not disclose payouts on the Ford Falcons. CCLSWA also argued that the contract was unjust and had included the forced sale of insurance in breach of section 133 of the Consumer Credit Code, failing to disclose.
CCLSWA was able to obtain a settlement on the basis that the outstanding balance of the loan was written off and the security over the client’s home was released. After the settlement was reached, the credit union again contacted the clients, told them that there was still money owing on the account and that the credit union had sent the file to ‘bad debt recovery’.
Case Study 5 Debt Consolidation; Unjust Contracts
The clients, an intellectually disabled couple consolidated two existing loans with other financial institutions, with a finance company. One of the existing loans for an amount of $60,000 had an interest rate of 7.3%, whereas the refinance had an interest rate of 12.45%. Repayments also increased from approximately $250 per fortnight to more than $200 per week.
The credit provider sent the clients to seek ‘independent legal advice’ before granting the loan. However, the clients did not understand the explanation and continued to think that the repayments were much lower than they actually were.
The clients were unable to meet the payments and the credit provider threatened to foreclose on their property.
CCLSWA argued that the refinance was unfair as the terms of the refinance were less beneficial to the clients than those under the original loans. In addition, it should have been clear to the credit provider that the clients did not have the financial capacity to pay the loan based on their income from Centrelink, CCLSWA was able to negotiate a settlement with the credit provider whereby the credit provider write off approximately $15,000 in enforcement expenses and default interest, and rewrite the loan contract at an interest rate of 7.3% with repayments that the clients could afford.
Case Study 6 Credit Reporting
Our client and his partner were co-borrowers on a home loan. The relationship broke down and the couple voluntarily surrendered the property. The lender agreed to arrange to sell the property. The client wrote to the credit provider seeking information on the sale. He received no response. The client made several other unsuccessful attempts to obtain information.
The client subsequently had two credit applications rejected on the basis of his credit record. He was also contacted by a debt collector two years after the voluntary surrender. This was the first time the client had been told that the property had not been sold. The client immediately entered into an arrangement to settle the outstanding debt by payment of approximately $2000.
The client sought a copy of his credit file which indicated an overdue amount of $646,472.
CCLSWA argued that the credit provider failed to send our client written notice advising our client of the overdue amount and requesting payment of the amount outstanding prior to reporting the overdue payment, in breach of section 2.7 of the Credit Reporting Code of Conduct and section 18B of the Privacy Act 1998 (Cth). In addition, by reporting the overdue amount as $646,472.00, the credit provider or the credit reporting agency may have breached section 18R of the Privacy Act by knowingly or recklessly giving to any other person or body a credit report that contains false or misleading information.
A complaint was made to the Office of the Federal Privacy Commissioner, but was ultimately resolved directly with the credit provider. The terms of settlement included compensation for pecuniary and non-pecuniary loss as well as withdrawal of the disputed credit listing. The client subsequently found out that the disputed credit listing had not in fact been withdrawn.
