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Home / New Zealand

Mobile stores a bad deal

By Rachel Grunwell
Herald on Sunday·
19 Dec, 2009 03:00 PM4 mins to read

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Some of New Zealand's poorest families are facing a bleak Christmas after being locked into long contracts by "truck" shops, warn budget advisers.

The number of mobile stores in the South Auckland suburb of Mangere has risen from six to more than 24 in the past few years, according to Budgeting and Family Support Services chief executive Darryl Evans.

The companies sell goods on a lay-by basis after customers sign lengthy contracts. The total cost of the goods is not always advertised.

Many specialise in clothing, but others sell everything from electronic goods to food.

Most charged much more than traditional shops and operators typically approached vulnerable families on low incomes who couldn't afford to buy outright and had trouble getting other credit, said Evans.

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He knew of operators reselling $25 duvets from The Warehouse for almost $70 and $610 meat hampers from the Mad Butcher for $2370.

As the number of businesses has increased, so has the number of people citing them as a key reason for problem debt.

Evans said the number of clients who blame the trucks for money woes has spiralled from about 140 clients last year to 500 in the past 12 months.

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Although they operated elsewhere, he said Mangere was the poorest community in the country. Some of its residents did not fully understand the contracts, and more should be done to protect them, he added.

When the Herald on Sunday visited the area on Thursday, it took only minutes to see the practice in operation.

We approached Home Direct seller Daniel Wong after he stopped at a run-down state house down a shared driveway.

The customer was not home, but Wong said: "Everything in that house is new - I've even sold them an Italian suit".

Wong said he drove one of three trucks from his company targeting Mangere, and he had about 850 customers.

He said his was a cheaper truck service. He was selling a cotton baby blanket for $109 and packs of three Palmolive soaps for $4.50.

Clients usually paid him $10-$55 a week. He said he was improving their "lifestyle", they would spend their money "anyway" and argued "they're on benefits and it's the Government's money".

A truck operator for Mobile Shop refused to comment, but provided a brochure featuring such items as high-tech mobile phones.

It did not contain the total cost to the customer once payments were completed.

Mobile Shop sales manager David Sun said: "We do not trap people."

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He said he was too busy to answer questions on the phone and asked for emailed questions. There was no response by deadline.

Politicians from National and Labour are aware of growing concern about the trucks, and new policies expected by the end of June look likely to gain cross-party support.

Consumer Affairs Minister Heather Roy said her department had received complaints about the trucks from Budget Advice Services, Citizen's Advice Bureaus, Community Law Centres and shoppers.

She hoped they would be addressed by the ministry's review of the Credit Contract and Consumer Finance Act.

Proposed reforms include clearer and simple documents, more help for consumers in hardship and straightforward rules about repossession.

Under the Financial Services Providers Act, all credit providers would have to join an approved consumer disputes resolution scheme by 2010. The ministry has also proposed a ban on unfair contract terms.

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While noting that clothing trucks can provide a useful service, Roy was concerned that they should comply with the law.

"The more awareness consumers have of their rights, such as knowing they can require overpayments to be refunded, and that they often have the right to cancel their contracts, the more truck operators are likely to stay within the law."

Roy has the backing of her Labour counterpart Carol Beaumont, who warned the public not to buy goods they can't afford.

She said anecdotal evidence suggested the prices being charged by some operators were three to four times the cost in retail outlets and said consumer laws should be "tightened" to protect vulnerable consumers more quickly.

Annual spending cut from $15k to $2k

Mother-of-eight Margaret Perry has learned a lot about dealing with truck operators since meeting Budgeting and Family Support Services chief executive Darryl Evans.

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Evans says the 42-year-old beneficiary used to spend a staggering $15,000 a year on the trucks but has cut that to about $2000.

Perry repays about $30 a week, mainly for clothing, blankets, sheets and tea towels.

She doesn't own a car and buys from the trucks because it's easier than "carrying eight kids around with me".

"But I've cut down to (buying from) two trucks - with help from the budgeters".

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