Credit and the Consumer Guarantees Act

The Consumer Guarantees Act says that goods you buy from a seller must be of acceptable quality, fit for their particular purpose, match their description, sample or demonstration model. If you bought goods on a credit contract, your rights are the same as a cash buyer.

What do I do if the goods I bought on credit are faulty?

Contact the retailer in the first instance. If the goods are faulty, the seller must put this right by providing you with a repair, replacement or a refund depending on how serious the problem is.

See here for more information on your rights when goods are faulty.

What do I do if the service I bought on credit was not good enough?

Contact the seller and ask them to repair the problem, or if it is serious you can cancel the service.

See here for more information on your rights when a service isn’t good enough.

Can I stop my loan repayments?

Don’t stop your loan repayments. Your dispute with the seller regarding the goods is separate from your agreement with the creditor. If you stop your payments, you could end up paying penalty interest, or worse, the goods could be repossessed.

Do creditors have obligations under the Consumer Guarantees Act?

Creditors are service providers (providing you with credit). The Consumer Guarantees Act requires them to use reasonable skill and care.

Creditors are also responsible for the quality of goods and services bought on creditIf the seller arranged the loan for you then the finance company is also responsible for the quality guarantees under the Consumer Guarantees Act and has the same obligations as the supplier. It is usually easier to get a remedy from the seller. However, in some situations you may want to approach the finance company, for example, when the seller has gone out of business.

I asked my finance company to help and they said they are not responsible for the quality of the goods. What can I do?

Some finance companies do not understand their responsibilities. Send them this letter to explain the law to them:

The _________ [goods] I purchased on _______ [date] from _________ [shop/ supplier] are the subject of a credit contract between myself and your company. This contract was arranged by the seller of the goods.

The Consumer Guarantees Act 1993 provides that consumer goods must be of acceptable quality and fit for their particular purpose. The goods are not of acceptable quality because [explain the nature and extent of the fault]. Under the definition of supplier in section 2 of the Act, you are a supplier of the goods because the loan was to pay for the goods and was arranged by the trader. So I am entitled to seek a remedy from you directly. This letter is a request that you ____________ [explain what you are asking for (a repair, replacement, or refund)].

What if I was given incorrect information?

Sometimes the problem with the goods relates to representations the seller made (what the seller told you about the goods). If these representations mean the goods breach the Consumer Guarantees Act, then the finance company is also responsible for sorting the problem out.

Example: An appliance store tells Heather the DVD player she wants to purchase can play and copy DVDs. After she buys it on finance, she finds out the player can’t copy DVDs. When she goes back to the store to complain, she finds it has closed. After seeking advice, Heather refers the finance company to section 45 and 46 of the Consumer Guarantees Act, which says that even though it was the seller that made the representation to her, the finance company is responsible for remedying the problem under the Act.