Robin had received a letter from a lender, saying that her motor vehicle loan was in default, and that the car would be repossessed if Robin did not pay several thousand dollars in arrears.
A few weeks later, the lender repossessed the car and sold it at auction. But after deducting the sale price from the loan, Robin was still left owing around $17,000. The lender asked Robin to pay the balance and said that, if she could not make any payments, they would need to look into court action.
This had all come as quite a surprise to Robin. She said that, up until she received the repossession warning from the lender, she had no idea that there was any motor vehicle loan in her name. Robin complained to FSCL, saying the loan was fraudulent.
Dispute
Robin claimed she had only learned about this loan a few months ago. She said that the car was a company car, belonging to her former employer. She had agreed to have the car registered in her name, but she said she was never told about any loan. Robin said that the employer must have forged her signature on the loan documents.
In the circumstances, Robin did not think it was reasonable for the lender to try and enforce the loan against her.
The lender disagreed – they said they had reviewed the information they had collected from Robin when the loan was taken out, and they were satisfied that Robin had agreed to the loan.
Review
We reviewed the evidence on the lender’s file, and found there was convincing proof that Robin had taken out the loan herself.
First, the documents which the lender had collected as part of the loan application process were a collection of very personal documents which only Robin would have had access to, including:
- Robin’s bank statements, going back three months
- a copy of the sale and purchase agreement for Robin’s home, and
- a copy of Robin’s driver’s licence.
Robin did not have any convincing explanation as to how her employer could have had access to all of these documents.
Second, the car dealer who had prepared the loan documents had also signed a form certifying that he had viewed Robin’s driver’s licence and confirming that the person applying for the loan was the person pictured in the licence.
Third, the lender had received several emails from Robin’s personal email address over the term of the loan. This was the same email address which Robin was using to make her complaint to FSCL. This was, in our view, a strong indication that Robin was at least aware of the loan, and that she was not telling us the full story.
Finally, there was the fact that the police had investigated, but had found no evidence of fraud. This was not conclusive proof that the loan was legitimate, as the police would have been looking for evidence that could establish beyond reasonable doubt that fraud had occurred. However, we did think the police’s findings were evidence that the loan was not fraudulent.
Resolution
We issued a formal decision, finding that it was reasonable for the lender to enforce the loan against Robin, and recommending Robin discontinue her complaint.
We did still have some concerns that, even if Robin did agree to the loan, she might have been pushed into the loan by her former employer. We strongly encouraged Robin to seek legal advice about the rights she might have against her employer.
Insights for participants
This complaint demonstrates the importance of having robust processes in place for verifying new clients’ identities.
If a client is looking to open an account or engage your services, it is important to have processes in place to ensure you know who you are talking to, and record-keeping which shows that those processes were carried out. Identity verification measures can be cumbersome, but they can protect you and your business if you ever need to enforce a loan or charge a disputed fee.
