Salvation Army launches 'ethical' truck shop to combat predatory lending

Tuesday, 19 February 2019

The Salvation Army has launched a new type of truck shop for Auckland's vulnerable consumers.

Touted as an 'ethical shopping truck', it's a bid to combat predatory mobile traders and lenders that cruise the city's poorer suburbs.

Those trucks sold goods on credit, locking clients into opaque contracts with extortionate interest rates of up to 800 per cent, Salvation Army social policy analyst Ronji Tanielu said.

'We're fighting a giant,' he said. 

**READ MORE:

* Women who fell prey to 'predatory' lenders break the cycle

* 'Dodgy, blood-sucking leech' businesses preying on the vulnerable

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

* Woman struggles to clear $11k debt to mobile traders

* Door-to-door trader get jail for failing to supply goods**

The Sallies' pilot truck, christened The Good Shop, would be based in south Auckland and would not have actual goods for sale within. It would instead house computers clients could use to shop online and financial advisors who could approve interest-free loans.​

Tanielu said predatory lending and its associated debt trap were 'not just brown poor person issues'.

The trucks preyed on the elderly, those with mental health issues, even the homeless – selling everything from stereo systems to food, he said. 

Clients tended to be socially isolated, have bad credit ratings or struggle with English.

'[Mobile traders] are clever – their staff speak clients' languages and they go right to the door of those who already feel trapped.'

An investigation into mobile traders last year found truck shops were selling food items at up to five times the price they sold for for at regular outlets.

In October 2018, the Government announced it would enforce more stringent rules for mobile traders – but changes weren't expected to come into effect until 2020.

Lenders who breached responsible lending principles would also face new penalties of up to $600,000.

Minister of Commerce and Consumer Affairs Kris Faafoi said at the time that amendments to the Credit Contracts and Consumer Finance Act (CCFA) to curb predatory lenders in 2015 'did not go far enough'.

Between the 2015 amendments and April 2018, courts have doled out $1.6 million of fines to dodgy mobile traders.

The Good Shop's project manager Jodi Hoare said the truck would 'undo some of the damage that has been done by predatory loan services in the community.

'Every day we see people trapped in a cycle of debt by these loans, with no other options open to them and often with limited economic understanding.'

The Salvation Army's State of the Nation Report found the predatory lending industry had grown by 39 per cent – or $1.5 billion – over the past five years.

Hoare said its tactics 'exploit our people'.

'The Good Shop will provide a safe alternative solution to people who may struggle with transport, are unable to make upfront payments or cannot obtain credit from mainstream stores to purchase what they need.'

Financial advisors in the truck could issue interest-free loans on a case-by-case basis.

Loaned money could then be used to buy items such as computers, whiteware, TVs, and furniture online from the Salvation Army's retail partners.