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By Catriona MacLennan – lawyer and women’s rights advocate.

DRIVE AWAY from Mangere Town Centre in South Auckland into the streets fanning out from the suburban hub and it takes only 5 minutes to spot a mobile truck shop.

The trucks are large and their paint jobs in bright blocks of colours – yellow, red and navy – make them highly visible. The vehicles trawl the streets in low income areas, selling clothes, bedding, furniture and electronic goods and more recently food.

The companies running the trucks have been operating for many years in South Auckland and Porirua but have started in other centres including East Cape, Napier, Rotorua, Whangarei and Whakatane. The prices of the goods they sell are much higher than in shops.

[caption id="attachment_3194" align="alignleft" width="300"]Vai Harris, Vaiola P. I. Budgeting Service. Vai Harris, Vaiola P. I. Budgeting Service.[/caption]

Vai Harris, service manager at Vaiola P. I. Budgeting Service, pithily sums up the crucial reason for the vehicles’ success: cash is not required. The companies all offer credit, meaning people can obtain food immediately even if they don’t have ready money.

Ms Harris says the other attractions of the trucks are they don’t do credit checks and they come to people’s homes. Families may not have a car, or it may be unreliable, or there may be no money for petrol, making going to the shops difficult.

Payment trap

Both the companies and the customers focus on weekly repayments required when goods are bought, rather than on the total amount to be repaid. Purchasers may not be aware of how much they will pay altogether: their emphasis is on the fact they believe they can meet the $20 or $30 a week payments.

This explains why people sign agreements to pay inflated prices for items they could buy far more cheaply in shops. Ms Harris has seen contracts charging $20 for a can of corned beef, $35 for a packet of noodles and $66 for powdered milk.

A 2014 Lync (NZ) Co Ltd contract obtained by Nga Tangata Microfinance Trust budgeter Linda McCallum lists prices ranging from $23.99 for a packet of biscuits to $49.99 for 1 packet of rubbish bags (see “Overpriced”). A Shoppers Stop Lifestyle Ltd document records the prices of shoes as $100 and 3 pairs of socks at $30.

Mangere MP Su’a William Sio says there are cultural imperatives at play. “The biggest thing in most of our communities is the cultural aspect of not wanting to say no. It’s being hospitable to people who come up to the doorstep. As a result of that, these salespeople take advantage of that. It’s often worse when it’s somebody [the customer] knows because they feel an obligation and because there’s a sense I should trust this person because he is one of ours.”

Mr Sio says trucks selling food has a lot to do with poverty, inequality and families not having regular work hours. They might receive a week’s pay one week, but only a day’s pay the following week.

Ms Harris says prices charged for non-food items are also high. She had one Mangere client charged $990 for a 32-inch television when a 45-inch television could be bought in Manukau for $620. Another client bought 2 mobile phones for a total of $4500. When Ms Harris told her the items could be bought much more cheaply in a shop, the client replied she had no cash. A mother signed up to buy a bed for her daughter for $990, more than twice the price at a retailer. Ms Harris says that woman’s mortgage payment is the same amount as her income.

The documents often state the item won’t be delivered until after the purchaser has made 10 or 12 payments. Budgeters say sometimes items are never delivered. Free gifts promised may also fail to materialise. One of Ms Harris’ clients had paid $770 towards a TV but hadn’t received it. When Ms Harris spoke to the company, she was told the television was still on order.

Kevin Main of Budget Advisory Service (Whakatane) has recently dealt with cases in which the original documents have differed from the carbon copies. He says between $200 and $400 has been added to the debts owed for goods the customer didn’t purchase.

Mr Main’s budget service tries to cancel transactions and asks banks to place a note on accounts stating direct debits are not to be re-activated but he says banks are reluctant to do this.

Banking Ombudsman Deborah Battell says she’s been informed by Auckland-based budgeting services about companies getting people to sign multiple direct debits and has spoken to banks and officials about the problem. “The customer’s own bank will not know that multiple direct debits have been signed … it’s clear the public needs continued warnings about the practice.”

Industry compliance

The Commerce Commission says there are 40 companies operating mobile trucks.

Home Direct Ltd is the most established. It’s been operating since 1973 and has 150 staff and 72 trucks. Some companies are owner-operated businesses, operating under just-in-time principles so they only buy goods once a customer has committed to a purchase.

It’s not always clear what legal transaction the deal actually is. Some documents describe the transaction as a “rent to own agreement”. There is no such legal entity. Other transactions have characteristics of a layby sale, a consumer credit contract or a consumer lease but do not appear to fully comprise any one of these.

Consumer credit laws were tightened by the Credit Contracts and Consumer Finance Act 2003. The Act aimed to provide better protection to consumers after the Credit Contracts Act 1981 proved ineffective.

However, the 2003 law is also wanting and the government has had another go at reform. Part of the new law came into force in June last year and the rest – including a new responsible lending code – will take effect in June this year.

Recent law changes also introduced rules about door-to-door sales. However, the Commerce Commission’s opinion is these rules don’t apply if a mobile truck drives into a street and waits for people to come out to the truck, rather than the sales rep knocking on people’s doors. This is a significant loophole.

Commission investigation

The Commission began a 12-month project focusing on mobile trucks last year. Commission manager, competition, John Lyall, says the project aims to find out what’s happening in the mobile truck industry. A report is due in June.

Mr Lyall and senior investigator Jo Tilley say checks carried out during visits to traders indicate issues of non-compliance with the law. Some are minor but other traders are under investigation where breaches are likely to lead to enforcement action.

Ms Tilley says key issues are highly inflated prices and the quality is not what would be expected. It can also be difficult for consumers to find out total prices. She says the trucks target lower socio-economic areas. Companies get customers to complete multiple direct debit forms so if one is cancelled, another can be activated.

Other issues identified by the commission are high fees, ambiguous payment plans that do not include end dates and difficulties for purchasers in contacting the companies. The fee to get out of a $1300 deal can be as much as $600.

Ms Tilley says since the new laws took effect, the commission has been contacting mobile trucks to educate them about the provisions and check they’re complying.

Mobile trucks are also on the radar of some politicians. Commerce and Consumer Affairs Minister Paul Goldsmith visited the East Tamaki premises of a mobile truck company last December after hearing of widespread concerns about practices in the industry. A spokesperson for the minister says one of the problem areas in the money lending sector is irresponsible lenders offering loans to people who clearly cannot afford to repay. “That puts people and their families into impossible situations. The government is determined to crack down on unscrupulous lenders who take advantage of vulnerable borrowers and leave families in positions of incredible hardship.”

The spokesperson says it’s impossible to state with certainty whether all mobile trucks are compliant with the law, how many are not, or what breaches – if any – there are. He says the government has no plans to shut down mobile trucks. “It has, however, taken a number of actions recently to better regulate the activities of lenders, including door-to-door salespeople and mobile trucks.”

East Coast MP Anne Tolley says the issue is important to her as a local MP but believes it’s a problem for local government.

“[We] know of the long-term debt many of our vulnerable families on the East Coast incur as a result of mobile vendors. I believe local councils are best placed to deal with these trucks. I have written to the mayors in the Eastern Bay of Plenty part of my electorate and I am looking forward to working together on measures to curb the negative effects in the region, particularly in the suburban areas,” Ms Tolley says.

Exactly what role local councils could play to regulate these companies remains unclear.

Education efforts

Budgeters are divided on the efficacy of education about mobile trucks and financial literacy in preventing people from signing up to expensive deals.

Murupara Budget Advisory Service Trust manager Carolyn Meihana says educating the community is key. She advises clients to tell salespeople they need to speak to their budgeter before committing to buying. “Nine times out of 10, they leave then.”

She dealt with a case in which a small tablet computer was going to cost a total of $2500. When Ms Meihana queried the deal, the salesperson told her to beat it. “My client said ‘She’s my budgeter. You beat it.’ And she did.”

The service’s slogan is “Before you sign on the dotted line, think twice. Get budget advice”. Staff working in the centre have T-shirts with the slogan emblazoned on them.

However, Ms Harris and Mr Sua are less optimistic about the role of education. They say, as long as incomes are low and rents are high, desperate people will continue to sign up to expensive deals. says:

  • Companies operating mobile shopping trucks are targeting some of the most vulnerable consumers.
  • The Commerce Commission should take enforcement action against these companies where there’s a clear breach of the law.
  • Door-to-door sales rules need to be strengthened so they cover trucks which drive into streets and wait for customers to come to them.
This article was first published on – Submitted by and published with permission of, the author: Catriona MacLennan.]]>



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