3 March 2017
Release no. 85

First jail sentence in Commerce Commission case

Vikram Mehta, owner of mobile trader Flexi Buy Limited (Flexi Buy), has today been sentenced in the Auckland District Court to two years imprisonment after taking money from customers without intending to supply goods as promised.

It is the first jail sentence handed down in a prosecution initiated by the Commerce Commission.

Mr Mehta was convicted under the Crimes Act 1961 as a party to Flexi Buy’s conduct. He was the sole shareholder and director of the company during the period of its offending.

“The Commission has successfully pursued a number of cases against mobile traders, but this was a particularly serious one, and that’s why we took Crimes Act action against Mr Mehta personally,” said Commissioner Anna Rawlings.

“The Crimes Act charges are consistent with other cases we have pursued where traders have failed to supply goods or services that their customers have paid for. All traders need to know that the Commission can and will take this action where it’s justified,” said Ms Rawlings.

Flexi Buy told customers that their goods would be supplied once they had made a set number of payments, when it knew they would not be. Between late 2012 and early 2014 Flexi Buy entered into over 300 consumer credit contracts, but only nine customers received their goods.

Mr Mehta used Flexi Buy income for his personal use, rent on his Auckland apartment, and living expenses, including at least $22,000 spent during a 2013 trip to India.

In sentencing Mr Mehta today, Judge Cunningham said “because of the seriousness of what occurred here, I am not minded to impose home detention. In my view it needs to be a sentence at the top of the hierarchy of sentences to send a message to Mr Mehta and any other persons who seek to, in my words, rip off vulnerable people, that such behaviour that breaches the criminal law will be met with the full force of the criminal law.”

Mr Mehta has indicated that he intends to appeal.

“The sentence sends a strong message that there can be serious consequences for traders who take customers’ money without delivering the promised goods,” said Ms Rawlings.

Ms Rawlings noted that a number of recent cases have been taken against other mobile traders which have failed to meet their disclosure obligations, and consumers need to be aware of their rights when thinking about signing a consumer credit contract.

“Consumers should take all possible steps to protect themselves when buying from mobile traders and door-to-door sellers. We have produced guidance to help with this,” said Ms Rawlings.

The guides can be found on the Commission website.

Background
Flexi Buy sold household and electronic goods door-to-door around the North Island between late 2012 and early 2014. It stopped trading after the Commission commenced its investigation.

In September 2015, the Commission filed charges under the Crimes Act 1961 against Vikram Mehta as a party to Flexi Buy’s conduct for obtaining money from customers by deception and accepting payment from customers without intending to supply the goods they contracted to purchase.

Mr Mehta was found guilty of these charges in November 2016. The Judgment is available on the Commission website.

In February 2016, the company Flexi Buy was fined $50,000 in the Auckland District Court for breaching the Credit Contracts and Consumer Finance Act 2003 by failing to provide its customers with adequate disclosure of key information about their credit contracts. A further $3,408 was awarded in damages to affected customers.

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