Mobile trader 'signed up mental health unit patients to unreasonable phone contracts'

Tuesday, 24 September 2019

A mobile trader who went into a mental health unit and signed up nearly all the patients to unreasonable contracts for phones and PlayStation consoles is just one example of unfair commercial practices the Government is planning to stamp out.

Commerce and Consumer Affairs Minister Kris Faafoi and Small Business Minister Stuart Nash have announced new measures to protect businesses and consumers.

'We know that unfair commercial practices are harming New Zealand businesses and consumers,' Faafoi said.

'We're taking action to prohibit the most serious types of commercial misconduct, and to ensure there are better protections against unfair contract terms.'

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Two key changes are proposed. 'Unconscionable' conduct will be prohibited - this is serious misconduct that goes beyond what is commercially necessary or appropriate.

The Government was concerned at reports a mobile trader had signed up patients in a mental health unit to unreasonable phone contracts.

Current protections against unfair contract terms for consumers will also be extended to apply to business contracts worth less than $250,000.

Nash said some of the examples of misconduct that people provided during a recent consultation on the issue were particularly concerning.

'We heard about a range of potentially unfair contract terms, including extended payment terms, one-sided contract terms, and businesses being locked-in to contracts for long periods of time. We also heard that some businesses aren't complying with the terms of existing contracts, making excessive demands, and blacklisting and bullying their suppliers.

'Clearly, both small businesses and consumers are suffering because of poor commercial conduct, with negative effects on the economy. The measures the Government is taking will put a stop to this,' Nash said.

The Government surveyed a range of businesses, and found that half had experienced what they considered to be unfair conduct or contract terms. Many reported being negatively affected by unfair practices, and experienced problems including cash flow issues, increased costs, reduced sales, wasted time and stress

The ministers said the Government was told about a lender who repossessed and dumped a borrower's personal belongings, not to recover their unpaid debt but to 'send a message'.

Another trader used aggressive sales tactics to sell expensive skincare products to vulnerable people, including two with autism who paid $10,000.

Faafoi said the Government expected to introduce changes through a Fair Trading Amendment Bill by early next year.

'This is part of other work under way to promote competition and protect people against unfair business practices.

'The new market study powers which the Commerce Commission is using to review the retail fuel sector is an example of the sort of work the Government's doing in this space.

'We're also strengthening laws to protect vulnerable consumers from loan sharks, looking at other ways to improve business-to-business payment practices, and reviewing the current law around misuse of market power such as predatory pricing,' Faafoi said.