From time to time we are asked by credit providers why another credit provider does not comply with a legal requirement for their apparently similar product.

The first thing we look at is the type of credit product in question: is it a fully drawn loan (small amount, short term, medium amount or other), continuing credit (card or line of credit), hire purchase or a consumer lease?

If other credit providers are confused then it is likely that consumers will not understand the type of credit being offered and could be mislead.

Whether credit is offered in a store or online, it is essential that the differences are clearly explained to a consumer in all advertising.

Accurate descriptions of the product offered are becoming more important as the Credit Act becomes more prescriptive in the disclosure rules for different types of credit and the terms that can be used.

ASIC recently announced that Nimble Australia Pty Ltd, previously known as Cash Doctors, has changed its advertising following ASIC concerns it was potentially misleading.

ASIC said that in 2012 and early 2013 Nimble made statements both on its website and in the press that its credit contracts were ‘short term’. These statements did not clearly explain that the Nimble product was a continuing credit contract with an indefinite term.

ASIC was also concerned that statements Nimble made comparing its product with a credit card were inaccurate: its website stated that a loan could not be redrawn unless it had been paid in full and that Nimble’s loans were different from a credit card in that respect. In fact, Nimble’s loans can be redrawn before they are paid in full, like a credit card.

ASIC said that Nimble has removed references to ‘short term’ and comparisons with other credit products from its website and will stop using continuing credit contracts at the end of June 2013.

If you are developing new credit products, talk to Bright Law about the different requirements before you start marketing.