Leasing in Court

Alana Gandra, reporter for Agência Brasil The Consumer Protection Commission (Codecon) of the Legislative Assembly of Rio de Janeiro is prepared to take the case that resulted in the suspension of leasing payments in cases of theft, robbery, or return of vehicles to the Supreme Federal Court (STF).

The decision, issued by the 2nd Business Court of the Rio de Janeiro Court of Justice, covers clients of 13 banks and financial institutions (BV Financeira, ABN Amro Real-Aymoré, Santander, PanAmericano, Itaú Unibanco, Bradesco/Finasa, BMC, HSBC, Volkswagen, Fiat, Ford, Gmac and Sofisa).

Under the leasing system, the car is acquired by the bank or financial institution that lends it to the consumer in exchange for a rental payment. The vehicle remains in the name of the leasing company until the installments are paid off, at which point ownership of the asset passes to the consumer.

Codecon's lawyer, Rafael Couto, told Agência Brasil that the action taken by the agency addressed the high number of consumer complaints regarding the charges levied by leasing companies, which were considered abusive.

"She was being overcharged. As a result, the consumer either couldn't return the car or suspend payments. Because of this, their name ended up on the Credit Protection Service (SPC) list, which generated a range of difficulties and losses for them." Contacted, the commission decided to file the lawsuit after realizing that the Superior Court of Justice (STJ) "has already been ruling in this way," as well as the state court itself, said the lawyer.

Couto clarified that the leasing contract is hybrid, insofar as it combines financing, rental, and loan agreements. The client has the option to purchase the vehicle at the end of the contract, renew it, or return the car. "Because it [the contract] resembles a rental agreement, it doesn't make sense for the consumer to continue paying rent for an asset they are not using."

The decision by the 2nd Business Court of Rio de Janeiro is valid throughout the national territory. It also establishes that all consumers who had to pay off their contracts in case of theft or robbery of their vehicle in the last ten years must be reimbursed double the amount. Banks must declare null and void any contractual clause that imposes this charge.

Rafael Couto has no doubt that the Brazilian Association of Leasing Companies (Abel) will appeal to try to overturn the court decision. If this happens, Codecon intends to contest the appeal in the higher court, which is the Court of Justice of Rio de Janeiro (TJRJ), to uphold the decision.

The president of Abel, Osmar Roncolato Pinho, clarified, however, that it will be the companies cited in the lawsuit themselves, and not the entity, that will have to file appeals with the TJRJ (Rio de Janeiro State Court). Speaking to Agência Brasil, Roncolato analyzed that the judicial decision exceeds the terms of the contracts of the companies in the sector and "violates the rights of the leasing companies".

Because, according to him, contractually "the lessee who receives an asset, in case of its destruction, must replace it with an asset in identical condition." Roncolato said that in the case of a stolen vehicle that has insurance, the consumer must use the insurance money to acquire a new car that should be owned by the leasing company. "This lessee is being unjustly enriched at the expense of another." Therefore, he understands that "the spirit of the decision violates the commercial lease agreement, as it is currently structured," he explained.

The requirement for leasing companies to present a list of all leasing contracts made in the last decade, under penalty of a daily fine, should also be subject to appeal by the companies. "This, too, will be subject to appeal," Roncolato emphasized. Abel will monitor subsequent decisions to take a market position, he informed.

• A court ruling nullifies charges in cases of theft or robbery, but leasing companies intend to overturn it.