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Westpac Bank has been a naughty little boy

4 August 2012 15 comments

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The Unsolicited Goods and Services Act 1975 provides protections for people who have received goods or services they have not ordered or requested, i.e. unsolicited goods or services. The protections are available to all persons, not just consumers. Businesses receiving unsolicited goods or services are also protected under the Act.

The provision of goods and services in an unsolicited manner is not necessarily an issue. A problem arises, however, when the person receiving the goods does not want the goods or services and the sender or service provider demands payment.

With respect to goods, the sender relies on the consumer’s inertia not to return the unwanted goods. This practice is called “inertia selling”, and relies on the sender’s assumption that the consumer has accepted the goods because the consumer has taken possession of them. The sender then relies on this assumption to demand payment for the goods, supported by the statutory rules for determining the presumed intention of buyers and sellers under section 20 of the Sale of Goods Act 1908.

This practice puts the consumer in a position of disadvantage because their right to choose and accept the goods is limited. It also means that the consumer has responsibility for goods that are, to all intents and purposes, forced on them.

The supply of unsolicited services has the same effect as unsolicited goods in that consumers do not have the ability to choose the service or consider the associated risks. For example, when an agreement has been made for a service, liability and risk can be established so it can be managed. Where the service is unsolicited the consumer’s ability to protect their interests is reduced.

These practices put the consumer in a position of disadvantage because they deny the consumer the right to choose and accept the goods and services and any associated risks. On the other hand excluding the ability to provide goods and services on an unsolicited basis removes what can be a legitimate means of attracting business (i.e. a form of advertising) when done in an ethical and socially responsible way.

The Unsolicited Goods and Services Act balances these interests by establishing that any unsolicited goods remain the property of the sender until the person receiving them accepts them. If the sender does not recover the goods (and the consumer does not prevent the recovery) then within three months, or one month if the consumer notifies the sender that they do not want the goods, the goods become an unconditional gift to the consumer. Services are slightly different, but service providers are prohibited from invoicing unordered services unless they have reasonable cause to believe they have a right to payment. 

Ministry of Consumer Affairs, 14 June 2010

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Four years ago, almost every bank was reported to be sending unsolicited credit cards to their customers, adding to the mounting public debt in this country,

As an increasing number of consumers struggle with rising debt, a new survey reveals considerable public concern as unsolicited loan offers flood the market.

In a survey of more than 4600 people by Buzz Channel, 58% of respondents said that in the past year they’d been offered without having asked for it a new credit card, an extension of their existing card’s credit limit, a personal loan, or consumer credit.

And many are angry and want the law changed to prevent lenders from making such offers 45% said they’d like to see at least one change to credit laws to put curbs on lenders, compared to just 25% who thought the status quo was acceptable.

About 30% of respondents said they did not handle debt well

[abridged]

The biggest lenders are also the biggest users of unsolicited debt offers.

American Express was named by irate respondents 1035 times, to some extent due to approaches its salespeople make in airports and shopping malls, followed by the banks. Westpac received 352 mentions, National Bank 277, ASB 245, BNZ 221, ANZ 216, and Kiwibank, despite its smaller size, got 116 mentions.

GE Money, Diners Club, The Warehouse, Farmers Card, AA and Q Card were also reported as making unsolicited card-based debt offers, with GE Money topping the list of finance companies aggressively marketing debt in this way.   “

See: Barrage of unsolicited credit offers angers consumers

A year later, Westpac was being singled out as sending out not one, but two unsolicited credit cards, to it’s customers,

A month ago the bank offered Visa customers a new American Express (Amex) card, giving them a couple of weeks to opt out of the product. For those who didn’t, the companion cards started arriving last weekend – but so did the complaints.

Westpac says it has targeted specific customers, the cards attract no extra fee, the customers’ credit limit doesn’t change, they still receive just the one bill and even earn extra reward points with Amex.”

See: Westpac’s credit card giveaway draws complaints

This practice was endorsed by Victoria University economist, Neil Quigley, who said,

I think they’re looking to broaden their customer base, and they’re looking to add value to customers,. They’re also looking to add value to the customers that they see as most valuable.”

I’m sure they are.

But it is a practice that encourages undisciplined debt and is an irresponsible mis-use of  the power that banks wield.

About a year ago, a close friend of this blogger, “Tina” (not her real name), recieved two unsolicited credit cards from one of her two banks,

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All identifying marks have been redacted from the letters and credit cards, but this blogger has retained both originals, which are personally addressed to “Tina”.

“Tina” filed the items with a pile of other papers, as she was in the process of moving house, and thought no more of them.

That is, until she received a bank statement. She had been charged $45 for each card, despite  neither having been activated. Indeed, both cards are still affixed, by gum, to their respective covering letters.

“Tina” contacted Westpac and spent considerable time having the charges reversed.  She was able to demonstrate that she had never used the cards, and that she wanted them cancelled.  After several phone calls and a visit to her Bank branch, the charges were eventually reversed.

So much for ‘safeguards’,

The card needs a phone call to be activated, so if customers have concerns the advice is to cut it up and throw it away.”

See: Westpac’s credit card giveaway draws complaints

“Tina” does not want any more credit cards. She is trying to manage a large debt after her marital break-up, and extra credit is the last thing she needs right now.

She admits that it was tempting to use the cards, but is looking at other ways to consolidate; manage; and repay her debts.

Other people in “Tina’s” position might succumb to the temptation.  “Tina’s” position is unfortunately not uncommon,

The reason so many unsolicited debt offers are made, is that so many of us succumb to them.

One in five respondents admitted to Buzz Channel that they had used their increased card limits, or had accepted direct invitations to take out a loan, or spend up on a revolving credit loan they had paid off.

Though credit is easy to take out, it’s hard to get rid of.

A third of those who had tried to cancel a credit card, close a revolving credit account, or reduce their credit card limit said they had met stiff resistance.

See: Barrage of unsolicited credit offers angers consumers

As poverty increases in this country; unemployment grows; and welfare is insufficient to meet everyday outgoings, the use of credit cards becomes a desperate option for many people.

The practice of sending out unsolicited credit cards should be outlawed. Or, if recipients end up using them, banks should become liable if  credit card users are unable to meet repayment obligations.

Sending unsolicited credit cards to people in debt is like sending alcohol samples to alcoholics, and deserves our total contempt.

This is simply not good enough. An incoming Labour-led government must address this problem as a matter of priority.

And Westpac should reconsider this dubious practice.

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Additional

Ministry of Consumer Affairs: 7.2 Unsolicited Goods and Services

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