Some of you may have seen the original VFI News edition with a similar title back in May 2012. Why would I put it out there again you may ask?

It’s because I hate to see vendor finance businesses still risking potential fines of $220,000 for an individual and $1,100,000 for a company. Fines that can be so easily avoided. Read on:

Complaint to Tasmanian Office of Consumer Affairs and Fair Trading

The Tasmanian office of Consumer Affairs and Fair Trading, wrote this to a vendor financier regarding an ad for a property being sold with and Instalment Contract:

‘The Office of Consumer Affairs and Fair Trading in Hobart has received a complaint relating to the advertising of a property at [address removed], Tasmania on the website of [removed] on [date removed], 2012. In the advert reference is made to “owning the property for $xxx per week. There is no reference to a single price which is an offence under section 48 and 166 of the Australian Consumer Law. In the event of a conviction for the breach of this section of the Act substantial financial penalties can be imposed. Please provide your response to the complaint that this office has received.’

Australian Consumer Law References

The reference to the Australian Consumer Law is actually a reference to the Competition and Consumer Act 2010, an Act that replaced all the State based, Trade Practices Acts.

The best description of Section 48 (and 166) I’ve found is in the ACCC’s, ‘The Australian Consumer Law – A guide to provisions.’  It goes:

‘Section 48 of the ACL prohibits a person from representing a component of a price when making a representation about the price of a good or service, without also prominently specifying the single figure price a person must pay to obtain the good or service, to the extent that a single figure price is quantifiable at the time of making a representation.’

How Does This Effect Our Vendor Finance Advertising?

Check with your solicitor but these two sections of the Australian Consumer Law indicate:
•  You can still place an ad with no price information
•  If you include a regular payment amount in your ad you must nominate the sale price.

However the NCCP rules regarding Comparison Rates also need to be considered.

In short these considerations can be summarised as follows:
•  If you insert your interest rate or regular payment amount into an ad, you must insert all the prescribed Comparison Rate information.

An example of a format I believe will work for both the Australian Consumer Law and the Comparison Rate rules is:

‘4 bed, 2 bath, double garage, brick & tile home with a great backyard. Seller will finance with Low weekly payment.’

This text would allow you to either have no price information or full price information and not have to insert Comparison Rate information.

Calculating and displaying a Comparison Rate is discussed on a separate edition of VFI news.

Here are copies of Sections 48 and 166 of the Australian Consumer Law for your reference.