Steven Turner succeeds in Google-spoofing claim. Stocalfe Response found in ‘serious breach’ of the FCA’s consumer protection Principles – Unfair Relationship provisions under the Consumer Credit Act 1974 held to apply.
Summary
1. An attempt by Stocalfe Response Ltd. (“Stocalfe”) to claim unrecovered hire and other credit charges from a consumer who unwittingly signed up for its services after being ‘Google-spoofed’ was dismissed on the basis that Stocalfe was in serious breach of the FCA Principles and the relationship between Stocalfe and the consumer was an ‘Unfair Relationship’ within the meaning of Section 140A of the Consumer Credit Act 1974. The court exercised its powers under Section 140B of the Act to reduce the consumer’s indebtedness to ‘nil’, meaning that the claim failed.
Background
2. Immediately after being involved in a no-fault accident, Mr Mapston searched Google for a telephone no. so that he could obtain assistance from his own motor insurer. He dialled the first no. he saw, which connected him with ‘Non-Fault Auto Assist’, who in turn put him through to Stocalfe. At the outset of the call with Stocalfe, the operative (Jonathan) told Mr Mapston that Stocalfe were an independent accident management company who were not part of his insurance. Mr Mapston said that ‘sounded OK’, but comments later in the call about having ‘just come off the phone’ with his insurers suggested he had not fully understood the situation. Jonathan discussed hire needs with Mr Mapston and sent him an agreement to sign there and then, while Mr Mapston was stood at the side of the road. Jonathan told Mr Mapston that the charges would be claimed back from the Defendant’s insurer and that he wasn’t being asked to pay anything. There was no mention of payment obligations or the obligation to cooperate in recovery of charges. Mr Mapston was told to just scroll to the bottom and click. A transcript of the call demonstrated that the signing process from receipt of agreement to return to Stocalfe took a matter of seconds. The single confirmatory click added 6 x signatures to the Stocalfe documentation. The credit agreement signed obliged Mr Mapston to pay for not just hire, but also recovery, storage and an engineer’s report. An option to avoid CDW charges by adding the hire van to Mr Mapston’s own insurance had not been explained.
3. When Mr Mapston subsequently discovered that the van he was hiring was not from his insurer, he refused to cooperate with Stocalfe. The hire (etc.) claim against the third party had to be abandoned and so Stocalfe sued Mr Mapston for their charges in the sum of £13,032.94.
The arguments
4. Stocalfe claim was pleaded as a straightforward debt claim. Mr Mapston had signed a credit agreement and so was bound by it.
5. The claim was initially defended on grounds of misrepresentation but, when new counsel became involved shortly before trial, a defence based on consumer protection legislation was added. The new defence was based primarily on alleged breaches of the FCA Principles, which require credit providers to pay due regard to the interests of the consumer and treat them fairly (Principle 6), and to communicate with clients in a way that is clear, fair and not misleading (Principle 7). It alleged that such breaches (along with other conduct) rendered the relationship between Mr Mapston and Stocalfe an ‘Unfair Relationship’ falling within Section 140A of the Consumer Credit Act 1974. The court was invited to use its powers under Section 140B of the Act to discharge Mr Mapston’s indebtedness to Stocalfe.
6. As an aside, it should be noted that the Unfair Relationships provisions of the Act apply to credit hire agreements, even though such agreements are generally ‘exempt agreements’ and so not ordinarily caught by the Act’s consumer protection mechanisms.
The trial
7. The Claimant called its Operations Director, Mr Boyle, as a witness at trial. Mr Boyle confirmed that Jonathan had followed the script and that he had no issues with the way Mr Mapston had been dealt with. He confirmed that Stocalfe’s procedures made no allowance for the possible vulnerability of consumers who were calling immediately after an obviously traumatic incident such as a road accident. He also confirmed that Stocalfe was looking to recover 100% of its contractual charges from Mr Mapston, even though it generally worked on a recovery rate of 55%.
8. Mr Mapston said in evidence that if he had been made aware that he had a choice between accepting the credit services offered and/or either not having them at all (in terms of storage and recovery) or of having them at no cost through his own insurer, he would have chosen to either not have them or go to his insurer to secure them at no cost. He accepted that the transcript showed that he had been told that Stocalfe were not connected to his insurer, but says that he did not take that on board at the time.
The decision
9. The Judge accepted the Defendant’s case. He found that Stocalfe’s script minimised Mr Mapston’s liability to pay for the services offered. There was no reference to the obligation to pay personally or to co-operate with recovery; there was no warning of consequences if a customer did not cooperate. The Judge found that the FCA Principles (in particular Principles 6 & 71) were engaged and that Stocalfe was in ‘serious breach’. The payment obligation was buried in the terms and conditions of the agreement and the Judge could not envisage how someone could be expected to read that on a mobile phone. The Mitigation Statement signed by Mr Mapston (which said that Mr Mapston had had credit hire explained to him and agreed that he did not want to claim on his own insurance) referred to steps which had obviously not been taken. The transcript showed that Stocalfe did not establish a need for some of the credit services provided and there was nothing to demonstrate that Mr Mapston had an understanding of the arrangement entered into.
10. The Judge reminded himself that the burden of demonstrating fairness rested with Stocalfe and then found that the relationship between Stocalfe and Mr Mapston was an Unfair Relationship under Section 140A of the Act. He then used his powers under Section 140B to reduce Mr Mapston’s contractual liability to ‘nil’. Having done that, he then dismissed the claim.
Comment
11. This decision provides an all-too-rare reminder to credit hire companies that their operations are, at the end of the day, consumer credit operations. Consumers are given special protection under the law. Even where agreements are exempt from most other provisions of the Act, the Unfair Relationships protections still apply and can lead to courts taking a dim view of procedures adverse to consumer interests.
Court: York County Court
Judge: Deputy District Judge Wood
Date: 18th October 2024
Claimant’s counsel: Thomas Waldron
Defendant’s counsel: Steven Turner
Claimant’s solicitor: Mansfield Solicitors & Advocates Ltd.
Defendant’s solicitor: Sarah Moat @ Keoghs LLP
Defendant’s insurer: Axa
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