Judge criticises mobile trader for targeting the vulnerable
22 February 2017
Mobile trader Bestdeals 4 You Limited (Bestdeals) has been fined $47,250 in the Auckland District Court for failing to disclose key consumer information about its credit contracts and layby sales agreements.
It is one of 11 mobile traders, often referred to as truck shops, prosecuted by the Commission as part of its strategy to improve industry-wide compliance with consumer protection laws.
Bestdeals pleaded guilty to 19 charges under the Credit Contracts and Consumer Finance Act 2003 (CCCFA) and the Fair Trading Act 1986 (FTA). Using a catalogue, it sells door-to-door in Auckland, Whangarei and Hastings under the name Easylayby. It also operates a physical store in South Auckland called Super Mobile which offers layby sales.
Bestdeals failed to provide customers with an accurate statement of their right to cancel the contract or their right to apply for relief from unforeseen hardship, in breach of the CCCFA. It also failed to provide over 100 customers with a copy of their layby sales agreement terms and conditions when they entered the contract, as required under the FTA.
In sentencing Bestdeals, Judge Aitken said the company targeted the most vulnerable members of society, who could not pay for goods outright, and for whom credit was not otherwise available.
The judge described these consumers as “the precariat” – those living in precariously balanced circumstances, for whom a single event can tip an individual or family into poverty or at the very least create significant difficulty.
Bestdeals owner Mr Singh had submitted that he was not aware of legal requirements, that Bestdeals had simply used the same contracts as other providers, and had taken no legal advice.
Judge Aitken said this was verging on gross negligence and was certainly not a mitigating factor. “I reject strenuously the notion that Bestdeals is less culpable because it failed to take legal advice,” she said.
Commissioner Anna Rawlings said the Commission has worked to improve compliance in the mobile trader industry, through education followed up by enforcement action where required.
“In the Bestdeals case over 1,000 debtors were affected by the CCCFA offending. Some of the Bestdeals credit contracts failed to include basic information such as the total number of payments required and the amount of those payments,” she said.
Ms Rawlings adds that businesses choosing to operate in the consumer credit market must be familiar with, and follow consumer credit laws. “Businesses should also make sure that they are complying with the FTA including laws applying to particular sales methods that they choose to use, such as layby sales.”
The Commission prosecuted 11 mobile traders in 2016 following the wide-spread compliance issues it identified in its Mobile Trader 2014/15 Report. They were Appenture Marketing Limited, Best Buy Limited, Bestdeals 4 You Limited, Ace Marketing Limited, Smart Shop Limited, Goodring Company Limited, Betterlife Corporation Limited, Flexi Buy Limited, Macful International Limited, Zee Shop Limited and Sales Concepts Limited.
The Commission also has 12 ongoing investigations into mobile traders.