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Have you ever been confused when it comes to credit issues or curious about what protections exist when you obtain a credit card or a loan? Australia has a set of consumer credit laws put in place to help prevent you falling into debt or being taken advantage of by unsavoury lending practices.
Trying to decode laws can be a chore at the best of times, so we've put together this quick guide to help you understand what your rights are when it comes to credit. We also cover where you can lodge a complaint if you've been dealt with unfairly.
Consumer credit laws are designed to protect people from predatory lending practices and to ensure that credit is dealt with responsibly, fairly and uniformly across Australia. The National Consumer Credit Protection Act (2009) replaced individual state and territory legislation and appointed the Australian Securities and Investment Commission (ASIC) as the sole regulator for credit law.
It's important to know that consumer credit laws only apply if over 50% of the credit is being used for personal purposes. Business credit is covered by different regulations.
Consumer credit laws apply to almost any area where the borrowing and lending of money to individuals is involved. It can be split up into a few main regulatory areas:
In practice, consumer credit laws exist to protect you. Here are some of the main areas where you can take advantage of these protections:
There are more protections involved in consumer credit laws, but the ones listed above are some of the most important at the consumer end, especially for credit cards. If you're interested in diving into more detail on the credit code, ASIC maintains a comprehensive database of regulatory resources.
If you think your bank or credit card company has failed to follow a regulation, mistakenly issued you a debt or something else, here's what you should do according to ASIC's MoneySmart website:
1. Contact the business. Always contact the business first to explain the problem and see what they can do. If the problem isn't resolved, move to the next step.
2. Write a letter of complaint. A formal complaint should include the following:
3. Contact an independent body. Where a formal complaint to the business fails, a complaint to an independent body can help. As long as the business hasn't responded to your complaint promptly or satisfactorily, it will hear your complaint for free. The Australian Financial Complaints Authority (AFCA) is the body to contact for bank and financial institution issues.
For customers who are unsure who to contact, you can ring up ASIC's infoline for assistance on 1300 300 630.
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If I use a credit card to make a purchase, is the bank a party to the transaction? In other words, if a trader fails to honour a warranty do I have recourse from the bank?
What are the rules on unauthorised credit card transactions?
Hi Rob
The Consumer Credit Legal Centre (NSW) has a great resource on unauthorised transactions.
Cheers
Jeremy
When making a purchase over the phone or online with your credit card, whereby you provide the merchant with your credit card number, what rules apply to the further use of that card by the merchant ie, if you have not specifically authorised it for further charges the merchant may deem applicable?
verifying a credit card holder on transactions that are done via ‘phone or email?
what is the correct and legal way of verifying a card holder. We use a disclosure form and ask our clients to fill in the card details and sign it. BUT we are now informed that the same result is quite legal to do with a “verbal” authority. Please help
Hi Wayne. Thanks for your question. From what I’ve experienced lately as a consumer, it appears that over the phone verification is common. For some reason sellers seem to be going for BPay instead of taking credit card details over email. I guess this is for fraud prevention?
I’m happy for anyone who knows more about this to jump in and contribute!
Please note that this is not to be taken as legal advice.