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​Rogue mobile reseller pleads guilty to 11 charges of dodgy customer dealings

​Rogue mobile reseller pleads guilty to 11 charges of dodgy customer dealings

Commerce Commission prosecutes seventh mobile trader for dodgy electronics sales tactics.

Mobile trader Smart Shop Limited, trading as SmartStore, has pleaded guilty to 11 charges brought by the Commerce Commission for its loan contracts and extended warranty agreements.

The charges alleged inadequate disclosure of key information to customers about their loans and extended warranty agreements, and misrepresentations about consumers’ rights under the Consumer Guarantees Act 1993 (CGA).

According to the New Zealand watchdog, the charges were filed under the Credit Contract and Consumer Finance Act 2003 (CCCFA) and Fair Trading Act 1986 (FTA).

SmartStore is part of the “Shop Direct” group of companies, which also has businesses “Shop Direct” and “Gadgets+.”

Collectively, they share resources, including office premises, staff and office systems, operating around the country as mobile traders.

Mobile traders, also known as “truck shops”, are businesses that do not have fixed retail premises in the traditional sense, with some of these traders operating mobile shops, usually from trucks, while others employ staff that sells goods door-to-door using catalogues and brochures.

The “Shop Direct” group sells door-to-door using catalogues and brochures.

“SmartStore sold electronic goods direct to consumers through a combination of door-to door sales and telemarketing,” a Commerce Commission statement read.

“These goods were offered on credit, often to consumers who could not get credit in mainstream retail outlets. Salespeople “door knocked” for new customers and made repeat sales to existing customers through telemarketing.”

According to reports, SmartStore did not disclose key information to customers in their initial contracts or when their contracts were varied such as the debtor’s right to cancel their contract, the debtor’s right to apply for hardship relief; and the frequency of continuing disclosure statements.

As a result, the total contract price and the total amount of payments to be made to repay the loan were incorrect because they did not include the monthly administration fee and, if applicable, the weekly Smart Club membership fee.

“SmartStore also offered consumers who purchased electronic goods membership in the “Smart Club”, for an additional $5 per week,” the report states.

“Membership offered consumers a number of additional benefits. The Smart Club membership was an extended warranty agreement, as defined under the FTA. SmartStore was required to provide certain information about the extended warranty agreement, which they failed to do.”

In addition, consumers were given false or misleading representations about the existence or exclusion of their rights under the Consumer Guarantees Act (CGA).”

SmartStore is the seventh mobile trader to be prosecuted this year.

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.

Following this, Goodring and Betterlife were fined a total of $171,500 when they were sentenced in June, while the fourth, Ace Marketing appeared for sentence in the Auckland District Court on 1 July 2016, and the Court’s decision is pending.

The fifth, Macful International Limited, appeared in Manukau District Court last month on 21 charges under the CCCF Act and the Finance Service Providers (Registration and Dispute Resolution) Act 2008. A sixth mobile trader has not yet appeared in Court so can’t be named.

The Commission has a further 13 ongoing investigations into the conduct of mobile traders.

In August 2015, the Commission published its mobile trader report after a year-long investigation into the industry, finding that 31 of 32 mobile traders did not comply with all their legal obligations, highlighting systemic non-compliance issues in the industry.

SmartStore was one of the 32 mobile traders identified in the Commission’s mobile trader project.


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