There are calls for the Commerce Commission to take decisive action on the illegal practises of truck shops that sell door-to-door in New Zealand's poorest communities.

The consumer watchdog has released the damning results of its year-long investigation of mobile traders, commonly known as truck shops.

It found trucks were offering goods perceived as desirable by their target market of lower socio-economic customers, but at a lower quality than the goods in mainstream retail outlets.

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Truck shops were charging significantly higher prices than for comparable goods in normal shops and charging extra fees such as default fees for missed or cancelled payments, establishment fees and cancellation fees.

"The number of complaints we receive about the business practice of mobile traders has increased markedly in recent years," commissioner Anna Rawlings said

"We had anecdotal evidence that some of the most vulnerable members of our community were being given confusing or deceptive information by mobile traders, particularly over the total price of their purchases.

"We have taken action over mobile trader complaints before, but this project was a chance to delve deeper into the business practices of mobile traders and the extent to which they are complying with the law."

Commission staff visited 32 mobile traders around the country.

All but one, Home Direct, were found not to comply with their obligations under the Fair Trading Act and the Credit Contracts and Consumer Finance Act. Two traders are under investigation.

Issues identified included making it difficult for customers to cancel agreements, obtaining multiple signed direct debit forms, continuing to take payments after an item was paid for, misleading and confusing representations and a range of disclosure issues.

Lawyer Catriona MacLennan, who has researched truck shops this year, said the amount of non-compliance was a shock.

But she said the commission should have done more than just tell the other 29 traders what changes were needed.

"I'm pleased the Commerce Commission is trying to deal with this issue but we need robust enforcement action.

"We have known for a long time there are problems with these trucks, we should be past the stage of warning and educating."

MacLennan said the trucks should immediately be banned from selling food and an interest rate cap should be imposed.

Labour MP Kris Faafoi has drafted a member's bill that would introduce such a cap.

Raewyn Fox, chief executive of the Federation of Family Budgeting Services, said banning the truck shops was not the answer because it would just push them underground.

"There is obviously a market for them otherwise there would not be an expanding number of people trading."

She said the Commerce Commission results were no surprise and mirrored her organisation's experience of the sector.

Budget advisers dealt with people who had problems with the operators being misleading around prices and being hard to contact after a purchase, she said.

Home Direct managing director Michael Wright said he thought the report was balanced and addressed the issues in the wider industry.

He said his own truck shops' prices were regularly checked against mainstream retailers and were comparable for most categories.

It was only whiteware and electrical goods where it was hard to match the prices offered by the bigger retailers, he said

Rawlings said customers were attracted to the convenience of mobile traders and the low weekly or fortnightly payments.

She said many offered easy credit as they did not do credit checks.

"While the total price of an item may be significantly higher than in other stores, sometimes more than double, the relatively low repayments, often as little as $10 per week, were attractive."

" Currently there is no law in New Zealand that restricts the prices or interest rates traders can charge, other than the CCCFA requiring that interest charges are not oppressive," Rawlings said.

"We will be revisiting the traders we have given compliance advice to in the coming months to check they have made changes and are now complying with the law.

"In the event they have not we will take further enforcement action, including criminal and civil proceedings where appropriate."



Checks on truck shops will be made as part of a second commission mobile trader project over the next 12 months.