Biggest truck shop fine so far, total fines reach nearly $1.6 million

Monday, 30 April 2018

In the biggest fine so far handed down against a mobile trader, Mobile Shop Limited (Mobile Shop) has been fined $330,000 for breaches of consumer laws.

Auckland-based Mobile Shop failed to provide key contract information to borrowers before they signed the contract, failed to ensure contract information was expressed clearly and concisely, and made false or misleading statements about consumers' rights.

Commissioner Anna Rawlings said all of Mobile Shop's contracts lacked basic information such as the number of payments and an accurate statement about cancellation rights.

'Most sample contracts viewed by the commission also failed to state the payment amount and when the first payment was due. The wording was confusing and error-ridden and the contracts were in small font making them difficult to read,' Rawlings said.

**READ MORE:

* Commerce Commission truck shop crackdown nets near $1m in fines 

* Mobile truck shops investigated by Commerce Commission

* Another truck shop in hot legal water over poor grammar in consumer credit contracts**

Mobile Shop pleaded guilty to 24 charges, 12 under the Fair Trading Act and 12 under the Credit Contracts and Consumer Finance Act. It was also ordered to pay $10,800 in statutory damages to about 50 debtors.

The offending covered more than 5000 contracts entered into between October 2015 and September 2016, with an estimated total value of more than $1 million.

Mobile Shop is the 13th trader to be sentenced since the release of the commission's 2015 mobile trader report bringing the total fines handed down in the prosecutions of mobile traders to $1.56 million.

In sentencing in the Auckland District Court last week, Judge Patrick Treston said the number victims was significant and they were 'particularly vulnerable'.

He noted that winding down of the business was nearly complete.

The report identified widespread non-compliance with consumer laws by mobile traders.

After it was issued, the commission followed up with mobile traders to see if compliance had improved and then took enforcement action including prosecutions in cases of continued non-compliance.

Rawlings said although this was the last prosecution from the mobile trader report, there were still a number of investigations open and the watchdog would continue to take enforcement action against traders who acted illegally.

'Our focus is on improving trader compliance with consumer laws and it's our observation that compliance is improving. Traders are coming back to us with new contracts and they are generally better,' she said.

'Our analysis also suggests a reduction in the number of mobile traders still in business. 18 of the 32 traders listed in the Commission's Mobile Trader Report issued August 2015 have closed down, ceased making new sales or exited the mobile trader business.'

Since the report:

- All 13 completed cases have ended in convictions

- Flexi Buy Ltd owner Vikram Mehta was jailed for two years, the first ever prison sentence in a prosecution initiated by the Commission

- Fines totalling nearly $1.6m have been handed down by the courts

- The fine against Mobile Shop was more than twice as high as the next highest fine, of $150,000 against Ace Marketing in July 2016

- Nearly $100,000 in returned fees and damages have been ordered

- Customers of one trader (Greenfield Global Limited trading as KiwiOwn) were refunded nearly $110,000 in credit and default fees following a commission  investigation

- One mobile trader has been sent five infringement notices totalling $5000