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Thursday 17 October 2013

13-280MR ASIC takes civil action against GE Money

ASIC has started legal action against consumer credit provider GE Money, seeking financial penalties against the company for making false or misleading representations.

ASIC’s civil penalty proceedings in the Federal Court of Australia are against GE Capital Finance Australia (trading as GE Money). GE Money’s customers include people who have Myer and Coles branded credit cards and also include cards such as 28 Degrees MasterCard, Eco MasterCard, Coles Source MasterCard, GO MasterCard, Buyer’s Edge, GEM Visa, Myer Card Black and Myer Visa Card.

The action centres on GE Money seeking customers’ consent to receive offers to apply for higher credit limits.

ASIC alleges GE Money engaged in misleading and deceptive conduct and made false and misleading representations to customers seeking to activate their credit cards or obtain credit limit increases.

ASIC contends the evidence will show that between 5 January 2012 and 27 May 2012, GE Money represented to customers, over the telephone and by letter, that they had to give GE Money consent to send them unsolicited credit limit increase offers before it would activate their credit card or give them a credit limit increase.

ASIC alleges that in fact, cardholders could still activate their credit cards or obtain credit limit increases without giving consent to receive unsolicited offers.

ASIC is seeking a declaration that GE Money engaged in misleading and deceptive conduct and made false and misleading representations, and a fine.

‘New laws around the sending of credit limit increase offers were designed to assist consumers to actively choose how to manage their credit limit,’ ASIC Deputy Chairman Peter Kell said.

The proceedings are listed for a directions hearing in the Federal Court in Sydney on 14 November 2013.

Background

From 1 July 2012, the National Consumer Credit Protection Act prohibited credit providers from making unsolicited written offers to increase people’s credit card limits. The Act provides that a credit provider does not contravene this prohibition if it obtains a customer's consent before sending an offer.

At the time of GE Money’s conduct, the maximum penalty for the making of false or misleading representations was $1.1 million for each contravention. The maximum penalty has since been increased to $1.7 million.

Editor's note 1:

On 13 November 2013, the Federal Court adjourned the first directions hearing in the matter over to 6 February 2014.

Editor's note 2:

On 5 February 2014 the Federal Court adjourned the first directions hearing to 20 March 2014.

Editor's note 3:

A directions hearing was held on 19 March 2014. The matter has been set down for hearing on 17 June 2014.

Editor's Note 4:

On 17 June 2014 the matter was heard in the Federal Court of Australia. Judgment was reserved.

Last updated: 17/06/2014 12:00