Mobile trader Flexi Buy Limited has been fined $50,000 in the Auckland District Court, the first mobile trader sentenced following Commerce Commission’s mobile trader report.
With a further $3,408 was awarded in damages to affected customers, Flexi Buy is one of two companies the Commerce Commission identified as being under continued investigation in a report on the mobile trader industry released last year.
While no longer trading, Flexi Buy primarily sold electronic goods such as smartphones, televisions and computers door-to-door on credit.
The goods were sold in a number of areas around the North Island including South Auckland, Whangarei, Tokoroa, Murupara, Porirua, Kaikohe, Hastings and Gisborne.
Despite no longer trading, Flexi Buy was charged under the Credit Contracts and Consumer Finance Act 2003 (CCCFA) for failing to provide its customers with adequate disclosure of key information about their credit contracts, such as the frequency or amount of payments, default interest and the debtors’ cancellation rights.
The company was also charged with describing some key information in a misleading or deceptive way.
In sentencing Flexi Buy, Judge Field said that the company had been “entirely reckless in its dealings with members of the public.”
“Clear and accurate disclosure is essential so that consumers can understand the deal they are agreeing to and what their rights are,” says Anna Rawlings, Commissioner.
“It is notable that in this case the judge indicated that significant harm and stress no doubt occurred to debtors as they tried to understand their rights.
“The Commission will continue to take action against credit providers where disclosure does not meet the required standard.”
Rawlings says this is also the first conviction of a mobile trader following the Commission’s report on the industry last year.
“We are continuing to review mobile trader compliance with the range of laws that we enforce and we will bring further prosecutions where we discover non-compliance,” she adds.
“Changes to the law which took effect last year will also enable us to seek higher penalties for breaches of the CCCFA than were available to the Court in Flexi Buy’s case.”
Rawlings says the Commission currently has three other cases before the courts involving mobile traders. Investigations into four others are ongoing.