The researchers behind the most recent Window on Waikato Poverty Report say retail truck shops which operate in low socioeconomic areas are creating a major strain for those on low incomes and are calling on Hamilton City Council to ban the practice.

According to council records, only one company currently holds a permit to operate within Hamilton, meaning others might be operating illegally.

Community psychologist Dr Rose Black and social scientist Dr Anna Casey-Cox, the two researchers behind the report, said people with low financial literacy were often targeted and they did not always understand the contracts they were signing.

"Not only do they sell at exorbitant prices, they offer credit at exorbitant interest rates," Dr Black said. "They will take money from people. [In my opinion] they don't care if people starve. They want their debt paid."


Dr Casey-Cox said: "The places [where the trucks turn up] can often be reinforcing of the problem.

"In Nawton, they are described as the 'fleets'. It's not just one truck - it's five or six trucks driving around the community selling these items at exorbitant prices relative to what you would get in retail stores."

Items for sale include electronics, bedding, clothing, toys and food.

Dr Casey-Cox said the companies were often hard to contact, which infringed on the Fair Trading Act, and pointed to ongoing Commerce Commission research into the actions of mobile retailers.

"Our recommendation is, we have to ban these trucks " their operation has to cease.

"They are not providing anything that is a benefit to these communities," she said.

The Window on Waikato Poverty Report will be presented during the council's Community Forum in August and Dr Cox said she hoped the council would seriously consider a ban.

Salvation Army senior budget adviser for Hamilton Tanya Crake said she fully supported Poverty Action Waikato's recommendation, claiming around 98 per cent of clients she saw had dealings with truck shops. She said several mobile retailers, that she regularly dealt with on behalf of clients, were currently operating in Hamilton.


"Very rarely do I get a client who does not have one or more of these trucks on their expenditure. I had a client the other day who had four of them," she said.

"A lot of customers don't understand the fine print of the contracts when they sign into it. All they hear is they have a credit. Every truck has a different limit and they can spend that on the spot once they sign the contract."

She said customers rarely understood the costs, such as sign-ups, penalties and defaults.

"Most of the trucks sell food these days. It's been happening for a while. When that emergency need is there, they can ring up because most of the clients have the drivers' mobile numbers. The food is about three to four times what you would pay in a supermarket or dairy - it's very expensive."

Ms Crake described most as a "law unto themselves" and said loans were usually based solely on income, without consideration for existing spending.

Hamilton City Council City Safe manager Kelvin Powell said the Public Places Policy and Bylaw endorsed by the council in February required mobile shops to carry a permit and banned them from operating within the CBD.


"We have one company that operates mobile truck shops. They have a permit for each vehicle. They have operated with a permit since 2012 and I am unaware of any instances where it's alleged they have breached the terms of the bylaw," said Mr Powell.

That company, Home Direct, was the only truck shop found to be meeting its obligations under the Fair Trading and the Credit Contracts and Consumer Finance Act following the 2015 Commerce Commission Review, Mr Powell said.

"If we get a complaint about a company that's operating without a permit, in breach of their permit, or alleged to be in breach of their permit, we will investigate. In the 18 months I have been in the role we haven't received any complaints. If there are companies that are operating and they don't have a permit, we will respond to complaints."

Mr Powell said that to ban trucks outright would mean an amendment to the bylaw, which is not due to be reviewed for five years.

"The draft policy and bylaw was open for consultation earlier this year where the public and any interested organisations were able to provide feedback before the policy and bylaw were formally adopted," he said.

"Our intention is always to encourage operators to comply with the bylaw. As a last resort our bylaw does outline an option to consider prosecution."


The Commerce Commission Mobile Traders Project was conducted over 2014-15 and identified 32 mobile traders, most working in and around Auckland.

Of these, 31 did not comply with all of their obligations under either the Fair Trading act or Credit Contracts and Consumer Finance Act.

The size of these operations varied, from owner-operators to sizeable enterprises with more than 35,000 customers and more than $7million in annual revenue.

Prices were usually substantially higher than the price for comparable goods at mainstream retail outlets and the companies tended to sell predominantly or exclusively on credit, layby or other deferred payment terms. As well as convenience and the temptations of immediately available goods, the report also noted many of the customers were unable to buy from mainstream retail stores due to a lack of cash or inability to get credit.

Mobile retailers rarely had any credit checks.

Some mobile traders were difficult to contact, making it difficult for customers to exercise their rights or were reluctant to provide customers with information about their contracts.


Commerce Commission consumer manager Stuart Wallace said that, since the publication of the project last year, the commission had launched investigations nationally into mobile traders, with some going to court. Those sentenced include FlexiBuy, BetterLife and GoodRing, with fines and damages totalling $222,000.

"Another three mobile traders are before the courts and we intend to file charges against two more shortly. We have 12 open investigations into other mobile traders," he said.

Mr Wallace said the commission would also be looking at whether lenders were complying with new responsible lending rules which were introduced as part of changes to the Credit Contracts and Consumer Finance Act (CCCFA) last year.

These included new responsibilities to exercise care, diligence, and skill in all dealings with borrowers, that lenders must make reasonable inquiries to ensure borrowers would be able to make the payments under the loan without suffering substantial hardship, and that lenders must help borrowers to make an informed decision.

The new changes also emphasised lenders must treat borrowers reasonably andin an ethical manner, including when a borrower suffered unforeseen hardship.

"We did see issues in Hamilton," said Mr Wallace.


"For example, Ace Marketing Ltd, who have pleaded guilty to charges laid under the Fair Trading Act (FTA) and the CCCFA, are based in Hamilton. Also, some of the customers of FlexiBuy were from Hamilton."

Ace Marketing Ltd was prosecuted for nine charges under the CCCFA and for failing to provide their customers with clear credit contract information. Ace Marketing also faces 19 charges under the Fair Trading Act 1986 (FTA) for allegedly misleading borrowers about their rights.

Mr Wallace said buyers should contact the commission and talk to community budgeting services or law centres for assistance.

"Take your own action. Most mobile traders have to be registered with a dispute resolution service who can provide a remedy where the trader has acted unlawfully," said Mr Wallace.

Home Direct marketing manager Madge Bright said unethical trade practices and companies which try to operate outside of the law needed to be held accountable.

"The new laws, which are being actively enforced by the Commerce Commission, will ensure only the responsible companies remain active in the market place," she said.


Western Community Centre administrator Max Coyle said the trucks first came to the centre's attention a couple of years ago when more people began seeking advice there.

"There's more and more companies that are doing it but it seems to have plateaued at about five different outfits."

Mr Coyle said contracts often contained "probably as many fees as you could legally attach to a contract".

"There were establishment fees, ongoing fees, monthly account fees. There were names of fees you had never even seen before."

Mr Coyle said customers he had talked to rarely understood the true cost of items.

"The item is sold to them as it's $4 a week, which sounds pretty good, say for a phone. What they don't tell them is it's a three-year contract and they are going to keep on paying and it often doesn't include the cost of the plan, so they will need a plan for a phone.


"The warranty isn't always that great if they have a problem with anything, the service isn't there so it's often incredibly hard to get replacements. Often they will just give up and go to a different truck shop and get something else."

Mr Coyle said sales techniques were often aggressive, and recalled the case of an elderly woman who was pressured into buying a tablet while her caregiver was absent.

A representative from Good Guys Group, which operate in Hamilton, said the industry occasionally garnered media attention which often ignored the positives of the business.

"Our main range of products include clothing, manchester, toys and shoes. On these items, I believe a fair price comparison would be with Farmers or Hallensteins," general manager Nyree Anderson said.

She said any ban would be based on misinformation, made worse by unbalanced reporting, and caused by a few unprofessional and unscrupulous operators who tarnished the reputation of the whole industry. She denied her sales team in Hamilton had ever used aggressive sales tactics.

"We have been in business for 28 years, employing around 60 people nationwide, and the operator that we have in Hamilton has worked for us for 17 years - if truck shops are banned in Hamilton, he will lose his job and the customers he has built relationships with over the past 17 years will lose the ability to buy product on credit from a very reliable source," she said.


Ms Anderson said many Good Guys customers were low-income families and the company often suspended payments if payees notified them of hardship.

Ms Anderson said Good Guys did not charge interest on purchases and there was no establishment fee. There was a $7.50 fee for a missed payment and $40 for a cancellation of the direct debit authority when there was still a balance owing. Employees check customers' bank statements to ensure that they have enough funds in their account to make the weekly payment.

"As we are giving out the goods prior to the customer paying for them, we obviously have a vested interest in them being paid for, so it would be bad business practice for us to give out goods to someone who can't afford to make the repayments," she said. "The current average weekly payment made by our mobile shop customers is $15. I firmly believe this is a fair amount for any family's weekly budget."

Hamilton News attempted to reach mobile shops identified by budgeting agencies, but they either hung up or refused to comment.