Australian Consumer Law – Watch Out!

In the first edition of N2P News I mentioned I’d cover the requirements of both the Australian Consumer Law and the National Credit Code in future editions. This edition does mention the National Credit Code briefly but its real focus is to make you aware to your obligations under the Australian Consumer Law, as it relates to selling your property with vendor finance.

Rent To Owns (Lease/Options) and the Australian Consumer Law

The requirements under the Australian Consumer Law when advertising your Lease/Options are pretty simple, i.e. When marketing a property you own, for sale with a Lease/Option, you need to make sure you don’t make false or misleading claims and/or statements.

Instalment Contracts & Deposit Finance and the Australian Consumer Law

The Tasmanian office of Consumer Affairs and Fair Trading, recently wrote this in regards to 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.’

The best description I’ve found of the relevant sections of the Australian Consumer Law 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 Instalment Contract and Deposit Finance advertising?

Check with your solicitor but the relevant 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 National Credit Code 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.

The Vendor Finance Institute can assist you with compliance regarding these issues. Click Here to visit VFI.

Cheers, Paul


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