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GE Money customers get refunds after FTA breach

GE Money customers get refunds for interest charged on “interest free” contracts

GE Money admitted breaching the Fair Trading Act 1986 by making misleading representations to some customers that it was entitled to charge interest during an interest free period specified on their contracts. About 3660 affected customers will receive a total of approximately $3.1 million in refunds.

The Commission’s investigation found that the affected customers bought goods from Noel Leeming and Bond and Bond stores during a ’Pay Nothing Until July/August 2007‘ promotion, which ran between late October 2005 and February 2006, with finance provided by Pacific Retail Services (later purchased by GE Money).

Under this promotion customers were provided finance for a term of three years and were not required to make any payments until an ‘early exit’ date (generally 17 months after the purchase date). Customers who chose to repay their loan in full by the ‘early exit’ date were only required to pay the purchase price and credit fees, without any interest.

However, after the ‘early exit’ date customers were required to pay instalments that included interest calculated from the date of purchase. This was despite the loan contract stating that there was an interest free period of 17 months, and the contract’s terms and conditions noting that interest commenced at the end of the interest free period.

Customers who wanted to repay their loans in full shortly after the ‘early exit’ date were surprised to find that they were required by GE Money to pay hundreds of dollars of interest. GE Money settled with a small number of customers who individually negotiated ‘periods of grace’ ranging from seven days to a few weeks, and these customers were permitted to repay their loans without being chargedᾠinterest. ᾠHowever, the majority of the affected customers who had not repaid their loans by the ˜early exit™ date were required to pay interest accrued during the interest free period.

GE Money has admitted that its advice to customers that they owed interest accrued during the interest free period was misleading and in breach of the Fair Trading Act.

GE Money has agreed to recalculate the outstanding balances of all affected accounts to exclude interest in the interest free period and to provide credits or refunds to affected customers. It is expected that the recalculation will be completed in December 2008. GE Money intends to send notices to affected customers with details of the final amount and refund process by mid December.

Commerce Commission Chair Paula Rebstock said, “Terms such as ‘interest free’ are very attractive to consumers considering big-ticket purchases, and retailers and finance companies have an obligation to ensure that, if finance is offered as interest free, it truly is.”

“GE Money has been cooperative with the Commission since the commencement of this investigation. It was not the promoter of these contracts, and has sought to work with the Commission to remedy this breach once the error came to its attention,” said Ms Rebstock.

Customers eligible for a refund will either:
• Receive a credit to their GE Money loan account if they have an outstanding loan balance; or
• Receive a direct credit to their bank account or a cheque, if they have repaid their loan in full, or if the recalculation results in a credit balance.
In addition, GE Money has agreed to pay interest on amounts overpaid at the 90 day deposit rate.


Pacific Retail Services’ credit contracts and its account maintenance system were acquired by GE Money in February 2006.

GE Money offers a wide range of consumer lending products, including personal loans, mortgage, insurance and promotional retail finance in New Zealand. It has over 300,000 customers and financial assets in excess of NZ$2 billion.

Section 13(g) of the FT Act states:

“No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of good or services, ….make a false or misleading representation with respect to the price of any goods or services.”


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