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. The sentence brings the total fines handed down in 13 Commerce Commission prosecutions of mobile traders to $1.56 million.
Auckland-based 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.
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. 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.
“Of the 13 mobile traders we have prosecuted, Mobile Shop’s contract was the least compliant, and the fine reflects that. We had advised Mobile Shop in 2015 that we did not think that its contract complied with the law, but the company didn’t change its contract,” said Commissioner Anna Rawlings.
“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,” said Ms Rawlings.
In sentencing in the Auckland District Court on 26 April, Judge Patrick Treston said the number victims was significant and they were “particularly vulnerable.” He noted that winding down of the business is nearly complete.
Mobile Shop is the 13th trader to be sentenced since the release of the Commission’s 2015 Mobile Trader report. 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.
“This is the last prosecution arising from the Commission’s follow-up on the original project, but it is not the end our enforcement work. We have a number of investigations open and we will continue to take appropriate enforcement action against traders which fail to meet their legal obligations to their customers,” said Ms Rawlings.
“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.
In August 2015 the Commission launched its Mobile Trader 2014/2015 report, which identified 32 mobile trader companies operating across New Zealand.
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 $1.6 million 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 Limited 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
The Commission’s animated series It’s All Good includes this episode about buying goods from mobile traders. Media are welcome to include a link to this in online stories.