Some Consumer Issues Of Interest
1. Payday Lenders
Payday lenders take advantage of the Consumer Credit Code not covering loans with duration of less than 62 days.
Usually do not charge interest rates but fees and joining fees. These can be rolled over at the end of the period when repayments cannot be met- people pay interest on interest
Security such as cars can be repossessed at short notice - does not have to follow procedures of the Consumer Credit Code
National chains include Australian Money Exchange and ChequeEXchange
These lenders have been growing fastest in ethnic areas
Choice Example
$200 was borrowed for two weeks - fees amounted to $74.50 including $25 joining fee. This is an interest rate of 972% (Up to 1300% has been reported) The Consumer Credit Code caps interest charges at 48%
Law was passed in NSW on June 21 2001 to cap interest rates at 48%
What issues of justice and equality flow from this decision?
How effective is the law in protecting consumers, manufacturers/ suppliers?
References:
Choice Magazine June 2001 p 4 The Australian April 4, 2001
Sydney Morning Herald 22.6.2001 p3
2. Internet Dumping
Internet dumping is the practice of connecting the modems of unsuspecting Internet users to international or premium rate phone numbers.
People discover that they have been disconnected from their usual ISP dial-up number and connected to a more expensive phone connection. This most commonly occurs on adult sites, games and music sites.
Users either do not read the conditions before clicking on the
[I agree] or it is changed by software which masks the change.
Australian companies who provide premium content are governed by the Telephone Information Services Standards Council that provides that web site operators must notify users of call rates.
Users dumped to international numbers have no protection as there are no international laws or standards governing Internet services.
(Consider the debate about restricting Internet gambling from Australia)
TIO recommends users
- Bar access to international and 190 numbers
- Use antivirus software that blocks IDD access
- Read carefully any window that offers downloads
- Put long expiry dates on Internet history files to allow dumped calls to be traced
What are the agencies of reform and the conditions that give rise to the need for reform?
Reference: TIO Talks 21, March 2001 Telecommunications Industry Ombudsman
3. Mobile Phone Services For Young Consumers
The largest growth area of sale and use of mobile phones is for young people.
Buying a mobile phone on a contract is an open ended contract - the cost is unlimited depending on your usage.
Do minors sign these contracts?
Do parents have to become guarantors?
Who is responsible if a minor cannot repay their phone bill?
What responsibility do mobile phone companies have to have prepaid billing which is up to date - should you be able to be charged for calls and SMS from previous months?
Key Questions/Issues
- To what extent can competition policy achieve equity and justice?
- How useful are legal controls in protecting the rights of consumers in regulating manufacturers/suppliers?
- How effective is the law in protecting consumers, manufacturers/ suppliers?
4. An Example Of Unconscionable Behaviour
Mark Ashton was a director of several companies. In May 1998 he was hospitalised in NZ with concussion.
His wife was asked to come to the National Australia Bank. She had Power of Attorney but was not a director or beneficiary of any of Ashton's companies.
The manager asked about Ashton's health and his wife signed an indemnity for both herself and husband for an overdraft of
$200 000.
Mark Ashton only found about this when the company (of which he was no longer a director) collapsed and the bank sought to sell the family house that was security.
Ashton contacted the Australian Competition And Securities Commission (ACCC) who commenced legal proceedings under the Section 51AA of the Trade Practices Act. The parties settled with the bank acknowledging it had acted unconscionably.
The ACCC identified the Ashton's were in a position of special disadvantage:
- Ashton was incapacitated - the manager spent considerable time discussing his health with his wife
- Mrs Ashton was unable to discuss the financial arrangements with his wife.
- Mrs Ashton had limited knowledge of the business and was not directly involved in the business.
- She was not aware of the special nature of what she was signing
- She was not informed that she should get independent legal advice before signing the contract
What is the meaning of 'particular vulnerability"
Yerkey and James
Amadio - guarantees given by parents who were non-English speaking
Key Questions/Issues
- To what extent can competition policy achieve equity and justice?
- How useful are legal controls in protecting the rights of consumers in regulating manufacturers/suppliers?
- How effective is the law in protecting consumers, manufacturers/ suppliers?
Reference The Law Report Tuesday 19/06/01
The key skill in answering questions in the Consumers Focus Study is to be able to explain the legal issues involved in the content. It is very easy to sustain an emotional argument, harder to justify your answer using your knowledge of consumer law gained from studying the course.
Some Consumer Issues Of Interest
1. Payday Lenders
Payday lenders take advantage of the Consumer Credit Code not covering loans with duration of less than 62 days.
Usually do not charge interest rates but fees and joining fees. These can be rolled over at the end of the period when repayments cannot be met- people pay interest on interest
Security such as cars can be repossessed at short notice - does not have to follow procedures of the Consumer Credit Code
National chains include Australian Money Exchange and ChequeEXchange
These lenders have been growing fastest in ethnic areas
Choice Example
$200 was borrowed for two weeks - fees amounted to $74.50 including $25 joining fee. This is an interest rate of 972% (Up to 1300% has been reported) The Consumer Credit Code caps interest charges at 48%
Law was passed in NSW on June 21 2001 to cap interest rates at 48%
What issues of justice and equality flow from this decision?
How effective is the law in protecting consumers, manufacturers/ suppliers?
References:
Choice Magazine June 2001 p 4 The Australian April 4, 2001
Sydney Morning Herald 22.6.2001 p3
2. Internet Dumping
Internet dumping is the practice of connecting the modems of unsuspecting Internet users to international or premium rate phone numbers.
People discover that they have been disconnected from their usual ISP dial-up number and connected to a more expensive phone connection. This most commonly occurs on adult sites, games and music sites.
Users either do not read the conditions before clicking on the
[I agree] or it is changed by software which masks the change.
Australian companies who provide premium content are governed by the Telephone Information Services Standards Council that provides that web site operators must notify users of call rates.
Users dumped to international numbers have no protection as there are no international laws or standards governing Internet services.
(Consider the debate about restricting Internet gambling from Australia)
TIO recommends users
- Bar access to international and 190 numbers
- Use antivirus software that blocks IDD access
- Read carefully any window that offers downloads
- Put long expiry dates on Internet history files to allow dumped calls to be traced
What are the agencies of reform and the conditions that give rise to the need for reform?
Reference: TIO Talks 21, March 2001 Telecommunications Industry Ombudsman
3. Mobile Phone Services For Young Consumers
The largest growth area of sale and use of mobile phones is for young people.
Buying a mobile phone on a contract is an open ended contract - the cost is unlimited depending on your usage.
Do minors sign these contracts?
Do parents have to become guarantors?
Who is responsible if a minor cannot repay their phone bill?
What responsibility do mobile phone companies have to have prepaid billing which is up to date - should you be able to be charged for calls and SMS from previous months?
Key Questions/Issues
- To what extent can competition policy achieve equity and justice?
- How useful are legal controls in protecting the rights of consumers in regulating manufacturers/suppliers?
- How effective is the law in protecting consumers, manufacturers/ suppliers?
4. An Example Of Unconscionable Behaviour
Mark Ashton was a director of several companies. In May 1998 he was hospitalised in NZ with concussion.
His wife was asked to come to the National Australia Bank. She had Power of Attorney but was not a director or beneficiary of any of Ashton's companies.
The manager asked about Ashton's health and his wife signed an indemnity for both herself and husband for an overdraft of
$200 000.
Mark Ashton only found about this when the company (of which he was no longer a director) collapsed and the bank sought to sell the family house that was security.
Ashton contacted the Australian Competition And Securities Commission (ACCC) who commenced legal proceedings under the Section 51AA of the Trade Practices Act. The parties settled with the bank acknowledging it had acted unconscionably.
The ACCC identified the Ashton's were in a position of special disadvantage:
- Ashton was incapacitated - the manager spent considerable time discussing his health with his wife
- Mrs Ashton was unable to discuss the financial arrangements with his wife.
- Mrs Ashton had limited knowledge of the business and was not directly involved in the business.
- She was not aware of the special nature of what she was signing
- She was not informed that she should get independent legal advice before signing the contract
What is the meaning of 'particular vulnerability"
Yerkey and James
Amadio - guarantees given by parents who were non-English speaking
Key Questions/Issues
- To what extent can competition policy achieve equity and justice?
- How useful are legal controls in protecting the rights of consumers in regulating manufacturers/suppliers?
- How effective is the law in protecting consumers, manufacturers/ suppliers?
Reference The Law Report Tuesday 19/06/01
The key skill in answering questions in the Consumers Focus Study is to be able to explain the legal issues involved in the content. It is very easy to sustain an emotional argument, harder to justify your answer using your knowledge of consumer law gained from studying the course.