Mobile traders face tougher penalties as Commission prosecutions continue

Two judges recently handed out the highest penalties yet to two mobile traders sentenced separately in the Auckland District Court for charges brought by the Commission.

Ace Marketing Limited and Smart Shop Limited (trading as SmartStore) were fined $150,000 and $135,000 respectively last month. They were both sentenced under the strengthened Credit Contracts and Consumer Finance Act 2003 (CCCFA) laws which were introduced by Parliament last year to give the Commission more tools to protect consumers.

The previous highest mobile trader penalty was the $98,000 fine handed to Goodring Company Limited in June this year when it was the first trader to be sentenced under the amended CCCFA.

The Commission is up to its 10th mobile trader prosecution as we continue to clamp down on the non-compliance we identified in our mobile trader report. We found that many mobile traders were selling high priced goods, often on credit, in vulnerable communities, with low levels of compliance with important consumer protection laws.

Ace Marketing pleaded guilty to 28 charges, including for failing to provide customers with key loan information required by the CCCFA. It also admitted to breaching the Fair Trading Act 1986 (FTA) by misleading customers about their rights, including relating to repossession, unforeseen hardship and rights available under the Consumer Guarantees Act (CGA).

In sentencing Judge Collins said, “The offending (of Ace Marketing) involved negligence on an extremely high level because the offending occurs with such frequency and over such an extended period of time. Harm to individual consumers is difficult to identify, but the protective nature of the legislation must be given full effect.”

SmartStore pleaded guilty to 11 charges for failing to provide the disclosure required by the CCCFA and for breaching the FTA by making misleading loan contract statements. It also failed to provide customers with information about its extended warranty agreements.

In sentencing Judge Ronayne acknowledged the recent increase in maximum Fair Trading Act penalties and said the message that deterrence is required could not be clearer.

The Court noted the “breathtakingly overpriced everyday items” and observed that “the power, sophistication and commercial nous was with the defendant, not the customer,” and that in this case “that imbalance of power was taken advantage of 2,415 times.” 

As well as prosecuting 10 mobile traders in 2016, the Commission has 13 other open investigations. The enforcement action this year will be followed up with an assessment of the mobile trader project next year.