Commission obtains highest penalties yet against traders

Commission obtains highest penalties yet against mobile traders

Mobile traders Ace Marketing Limited and Smart Shop Limited (trading as SmartStore) have been fined $150,000 and $135,000 respectively after being sentenced in the Auckland District Court.

These are the two highest penalties yet imposed on mobile traders taken to court by the Commerce Commission as it continues its work to improve compliance in the mobile trader industry.

Ace Marketing, a Hamilton based company, pleaded guilty to 28 charges, including charges for failing to provide customers with key information about their loans which is required by the Credit Contracts and Consumer Finance Act 2003 (CCCFA). It also admitted to breaching the Fair Trading Act 1986 (FTA) by misleading customers about their rights, including relating to repossession, unforeseen hardship and rights available under the Consumer Guarantees Act (CGA).

SmartStore, a Cambridge based company, pleaded guilty to 11 charges for failing to provide the disclosure required by the CCCFA and for breaching the FTA by making misleading statements in its loan contracts and failing to provide customers with information about its extended warranty agreements which is required by the FTA.

When sentencing the companies, both judges acknowledged the Commission’s Mobile Trader Report, published last year. The report found that many mobile traders were selling high priced goods, often on credit, in vulnerable communities, with low levels of compliance with important consumer protection laws such as the CCCFA, FTA and CGA.

Judge Ronayne, in sentencing SmartStore, noted its “breathtakingly overpriced everyday items” and the vulnerability of the company’s customers. His Honour observed that “the power, sophistication and commercial nous was with the defendant, not the customer.”

When sentencing Ace Marketing, Judge Collins commented that “it is very important that such traders comply with consumer protection legislation.” He later also noted the need to give full effect to the protective nature of the CCCFA and the FTA.

Both judges also acknowledged the recent increases in maximum penalties available under the FTA and Judge Ronayne said the message that deterrence is required could not be clearer.

Commissioner Anna Rawlings said the penalties imposed on both companies in these cases shows that the courts will impose significant fines in appropriate cases of unlawful conduct.

“The Commission has previously identified significant non-compliance with consumer protection laws within the mobile trader industry. We developed a strategy to address these issues and put the industry on notice that we would take action against continued non-compliance with the law."

“Although some traders have improved their compliance, the courts have imposed five mobile trader sentences in 2016 and the Commission has a number of other mobile trader cases before the courts and under investigation,” she said.

Ms Rawlings said the law is very clear about the type of information that needs to be provided to consumers and these cases demonstrate that if mobile traders, and other lenders, get it wrong the consequences can be severe. As well as being fined, Ace Marketing was ordered to refund customer fees relating to over 1,500 contracts.

“It is crucial that consumers understand what they are signing up to when they buy something on credit and that they are given accurate information about their rights when things go wrong. In the case of Ace Marketing and SmartStore thousands of customers were not given the accurate information that they needed about their contracts,” she said.

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