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Media Release 20 November 2000 20 November 2000 Be careful when you sign a contract warns Legal Aid Sometimes people buy things and enter contracts where there are many hidden traps and only realise that they have got themselves into when it is too late. This is especially true as we head towards Christmas when more people are likely to need some kind of credit or finance for their extra spending and often spend more than they can afford. Legal Aid lawyers assist almost 50,000 people a year with civil law problems, many of whom have serious problems with debt and credit overspending. Problems that consumers are usually not aware of can include the hidden pitfalls of interest-free loans, refinancing existing loans, offers of further credit from finance companies, high interest rates for defaulting on loans and extra bank and credit union charges for late payments on credit cards. "Sometimes people enter contracts they never intended to or they buy things, relying on statements made to them which are not true," says Legal Aid lawyer Michael Sergent. "Sales staff can also take advantage of consumers who have no commercial experience or who don't understand what they are getting into." Contracts, especially the fine print, can be difficult for consumers to understand, especially if they are young and inexperienced. In some cases consumers can be saddled with paying off loans for other people. If they are guarantors for somebody else's loan, they may have to repay it if that person can't. "Legal Aid can help people who find themselves in situations like this," says Mr Sergent. Available for interview: Michael Sergent Tel. 4223 0316 Mobile: 0408 610 298 Megan Pikett Tel: 4223 0307 Case studies of Legal Aid clients Pensioner cleared of debt An elderly man's only income is his age pension but he owns his own home. As he had left school at an early age, he cannot read well. He went to a car yard to look at a car he thought his son had started paying for. He wanted to help his son. When he went to the office of the salesman alone, the man signed a lease for the car. He did not understand it and was not told what he was signing. He could not meet the payments himself; his son made the payments. When his son lost his job and could not make the repayments, the finance company repossessed the car and sued the elderly man for the money it lost when it sold the car again. Legal Aid took the case to the Fair Trading Tribunal and the matter settled. The finance company agreed that our client would not be liable for any payments or debts under the lease and it agreed to pay our client's legal costs. Door to door sales open the door to debt Legal Aid assisted 10 clients who purchased burglar alarms on finance. All alarms were sold by door to door salesmen. The sales agents spent several hours with each client, demonstrating how effective their system was. Often, the sales agents quoted false statistics to exaggerate the level of crime in the area. Most clients were not told of the 10-day cooling off period allowed in the Door to Door Sales Act. Most clients felt frightened after hearing of the statistics. All our clients were pensioners and were not able to afford an alarm system but said they felt they could not refuse the sales agent. Many signed contracts in the belief that finance would be refused. Legal Aid negotiated to release all debtors from further liabilities under the contracts. The finance company agreed to release our clients from further debt. Young woman's mobile phone scare A 16-year-old girl organised the purchase of a mobile phone and asked her 19-year-old sister to pick it up. The older sister signed a contract when she collected the phone. The younger sister used the phone but did not pay the bills. Her older sister got the phone disconnected. The 16-year-old got the phone reconnected but still did not pay the bill. The company demanded the older sister pay the $400 owing. Legal Aid helped her when the matter went before the Fair Trading Tribunal. Telstra agreed to 'pay' the bill and the matter was withdrawn. |
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