Maths programs & loans

This fact sheet is for information only. It is recommended that you get legal advice about your situation. See the Fact Sheet: Getting Help.

Case Study

Alice and Spiro have three children. They are all in school, two in primary school and one in high school. While out doing the grocery shopping they were approached by a salesman. He asked Spiro if he was interested in his children’s education. Spiro said “Of course.” The salesman offered them an obligation free demonstration of maths and English software that would help his children improve their maths. Spiro said “Ok.”

Another salesman came to their home. He brought his laptop computer. He showed the children the maths programs. They all enjoyed it. The salesman said that at $5000 the maths programs were heaps cheaper than paying for tutoring at $40 an hour.

Spiro and Alice were very unsure and they also didn’t have $5000. In fact, they were already having trouble paying for all their expenses. The salesman told them they could get finance. It was worth it and their children need it. It was eventually 11.30pm and Spiro and Alice signed the contract.

Now Spiro and Alice can’t afford the loan payments. The children don’t use the software as they say it was only interesting to use once or twice.

There are a number of companies that sell educational software. The software is usually expensive. The companies will arrange a loan for you to buy the software.

As the salesperson comes into your home to demonstrate the software, you can feel under pressure to buy just to get the person to leave.

ALWAYS Take your time to consider whether the software and loan are right for you. NEVER sign the contract that day! Say that you need time to think about it.

The sales person may say there is a cooling off period of five days. Usually the software is installed more than five days after the contract is signed, if you want to go ahead with the contract always negotiate a longer cooling off period so your children have a week to use the software to decide if it is useful. If you negotiate a longer cooling off period get this in writing.

The loan

If you want to go ahead with buying the software consider the following:

1. Buy a cheaper educational software program (around $100) and see if your children use it regularly. If they don’t, they are unlikely to use another program regularly.

2. Shop around to get the loan. You don’t have to get the loan they are offering. You may be able to get a loan on better terms elsewhere!

3. If you are at all unsure as to whether you can afford the loan repayment don’t go ahead with purchasing the software.

4. If you still want to go ahead don’t be afraid to ask for a big reduction in the price of the software.

Cooling off periods

Under the Direct Commerce Provisions of the Fair Trading Act (NSW) a consumer must be informed of their right to cancel the direct commerce contract (s40E), and the manner in which the right may be exercised. For a contract that is made in the presence of the dealer and the consumer, the information must be in writing.

Check that your sales contract states that you had a right to cancel during the cooling off period, and the manner of cancellation is described in sufficient detail.

Questions:

(a) Did you try to cancel under the cooling off period?

(b) How did you? What was the response?

It is arguable, that a sales person should also tell the consumer about the right to cancel the contract in the cooling off period, even if it is included in the contract.

For more information see www.fairtrading.nsw.gov.au

Help! I have signed the loan contract, can I get out?

At law, when you sign a contract, you are assumed to have read it and are bound by it. There are some exceptions that may mean you are not bound or you can reduce the amount you owe:

• You were misled about the product and/or the loan;

• The contract is unjust;

• The product you were sold was not appropriate for the purpose you wanted it for.

If you believe one or more of the above exceptions apply you should consider raising a dispute in an independent dispute resolution scheme against the lender. You would argue that the person who sold the maths programs to you was the agent of the lender.

There are two EDR schemes:

• Financial Ombudsman Service ph: 1300 780 808 www.fos.org.au

• Credit Ombudsman Service ph: 1800 138 422 www.cosl.com.au

See Fact Sheet: Dispute Resolution.

Before going to an independent dispute resolution scheme you can try the following:

1. If you have just bought the software and got the loan, check the contract as you may be within the cooling off period. If you are and you don’t want to go ahead, notify both the maths company and the credit provider immediately in writing, see Sample Letter : Maths Programs : Rescission. Keep a copy of your letter.

2. Ring the company and say you are dissatisfied with the product. Say why. Ask for your money back.

3. Rescind the contract. See Sample Letter : Maths Programs : Rescission. This is when you say that the contract has to be cancelled because:

• The software does not work;

• The software does not work on your computer;

• Your children had learning disability making the software inappropriate;

• The features of the software were misrepresented.

4. Put your complaint in writing to the sales company. See Sample Letter: Raising a dispute with maths software products.

5. Complain to the Australian Securities and Investments Commission (ASIC) at www.asic.gov.au.

Contracts cannot be cancelled for minor reasons. It has to be a major problem which means the software does not work or it is completely inappropriate for the purpose. If you are unsure get legal advice.

I don’t think I can get out of the contract but I am having trouble paying – what can I do?

See Fact Sheet : Financial Hardship.

Need some more help? See Getting Help for a list of additional resources.