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Mobile trader pleads guilty to disclosure failures in contracts

25 January 2017

Mobile trader Best Buy Limited (Best Buy) has pleaded guilty to 16 charges relating to the operation of its door-to-door sales business in Auckland and smaller North Island towns.

The charges were filed under the Credit Contracts and Consumer Finance Act 2003 (CCCFA). Eleven charges (between 6 June 2015 and 28 April 2016) relate to failing to disclose the required information to its customers about their consumer credit contracts before the contract was entered into. Many of Best Buy’s consumer credit contracts failed to disclose important information such as an accurate statement of the amount or number of payments needed, an accurate statement of the debtor’s cancellation rights, and the right to apply for hardship relief.

Five charges (between 6 June 2015 and 31 October 2015) relate to a contract clause which was likely to mislead customers into thinking Best Buy had a right to repossess goods when it did not, failing to meet disclosure standards under the CCCFA.

Best Buy will be sentenced later this year.

Background

Best Buy sells consumer goods (including mobile phones, electronics, perfume, mowers and trampolines), often on credit, and at significantly higher prices than mainstream stores.

The Commission has a strategy to address the industry-wide compliance issues it identified in its Mobile Trader 2014/15 Report. Eleven mobile traders were prosecuted in 2016. They were 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. One is yet to be named. The Commission also has 12 ongoing investigations into mobile traders.

The District Court imposed fines of almost $510,000 on the five mobile traders sentenced in 2016.