Three mobile traders, commonly referred to as truck shops, have pleaded guilty to charges brought by the Commerce Commission relating to their lending practices.
Following the plea, Goodring Company Limited (Goodring), Betterlife Corporation Limited (Betterlife), and Ace Marketing Limited (Ace Marketing) will be sentenced in the next few months.
Representing the first businesses to be prosecuted by the Commission under tightened Credit Contracts and Consumer Finance Act 2003 (CCCFA) laws for lenders which were introduced last year, one Betterlife customer purchased an iPhone 5C for $2,401 to pay off in instalments, when these phones typically retail for around $600.
The charges come following the Commission’s year-long mobile trader project, which revealed wide-spread non-compliance issues in the industry.
Goodring will be sentenced on 30 charges relating to the CCCFA, while Betterlife and Ace Marketing face six and nine charges respectively under the same law - all three mobile traders failed to provide their customers with the legally required credit contract information in a clear and concise way.
In addition, Goodring faces two other charges under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 while Ace Marketing also faces 19 charges under the Fair Trading Act 1986 (FTA) for misleading borrowers about their rights.
According to the Commerce Commission, Betterlife, Goodring and Ace Marketing usually operate from a truck or through using door-to-door sales staff.
The three businesses sell consumer goods on credit (such as electrical items) at significantly higher prices than mainstream stores.
In August 2015, the Commission published its mobile trader report after a year-long investigation into the industry, finding that 31 of the 32 mobile traders identified did not comply with all of their obligations under the FTA and CCCFA.
As reported by Reseller News, in February Flexi Buy Limited was fined $50,000 in the Auckland District Court and $3,480 was awarded in damages to affected customers.