Flexi Buy fined $50,000 in first conviction of truck shops after ComCom crackdown

Truck shop Flexi Buy has been fined $50,000 by the Auckland District Court with a further $3408 awarded in damages to affected customers, in the first conviction of a mobile trader since the Commerce Commission's investigation into the industry last year.

The company, which is no longer trading, previously sold electronic and household goods such as smartphones and televisions door-to-door on credit at inflated prices. The goods were sold in a number of predominantly lower socio-economic areas around the North Island including south Auckland, Whangarei, Tokoroa, Porirua, Kaikohe, Hastings and Gisborne.

Flexi Buy was charged under the Credit Contracts and Consumer Finance Act for failing to provide adequate disclosure to customers on key information about their credit contracts including the frequency and amount of payments, default interest and the debtor's cancellation rights.

Flexi Buy was also accused of describing some key information in a misleading or deceptive way, with a number of customers claiming to have not received goods they had paid for.

Judge Chris Field said the company had been "entirely reckless in its dealings with members of the public."

In September, the commission filed charges under the Crimes Act and Fair Trading Act against former Flexi Buy director Bikram Mehta, alleging he obtained money from customers by deception and accepted payment from customers without intending to supply the goods they contracted to buy.

Mehta pleaded not guilty to the charges and has been convicted. He is due to reappear in the Auckland District Court on March 22.

Companies Office records show Flexi Buy Ltd is owned by Dunedin-based Rishi Bhatia.

The Commerce Commission currently has three other cases before the courts involving mobile traders and investigations underway into four others.

Its mobile trader report published last August after a year-long investigation into the industry found 31 of 32 mobile traders identified didn't comply with their legal obligations. The main problems were a lack of disclosure to customers entering into contracts and a failure to be registered as financial service providers.

The regulator initiated the investigation after a big increase in consumer complaints about how the truck shops operated, with anecdotal evidence the most vulnerable members of the community were being given confusing or deceptive information by mobile traders, particularly over the total price of their purchase.

Despite the total price of items being sometimes double that in other stores, customers were attracted by the convenience of the truck shops, the low weekly or fortnightly payments, and the "easy" credit as many traders don't bother with credit checks, the report said.

Commissioner Anna Rawlings said changes to the law, which took effect last year, will enable the regulator to seek higher penalties for breaches of the CCFA Act than were available to the court in Flexi Buy's case.

(BusinessDesk)