Two Christchurch finance companies have been fined after taking security interests in customers' washing machines, fridges and even their beds.
Alternate Finance and Crester Credit Company, both run by David Leighton Diggs, have been fined a total of $103,500 and ordered to pay another $21,000 in statutory damages, the Commerce Commission said on Thursday.
Under the Credit Contracts and Consumer Finance Act 2003 it is illegal to take security interests in essential household items, including beds, microwaves and stoves, medical equipment, heaters, fridges and washing machines.
This means if a loan isn't paid back on time, these items cannot be repossessed. The only exception is when the money was borrowed specifically to buy those particular items.
The majority of the two companies' loan contracts seen by the commission listed washing machines, fridges, microwaves and beds.
"These goods are protected because they are generally worth more to consumers than they are to lenders as security for loans," said Commissioner Anna Rawlings.
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The court was told the two companies never repossessed any of the prohibited items, and it was a mistake to include them.
The first company to be fined for including prohibited items as security interests was Aotea Finance, which was fined $49,000 last year.