New Zealand Law Society - Key information obscured in truck shop contracts

Key information obscured in truck shop contracts

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A second truck shop operator has been fined within a week for failing to disclose key information in consumer contracts.

The Commerce Commission says Macful International Ltd (trading as Ezitruck Shopping) has been fined $126,000 on 16 charges after failing to adequately the information and register as a financial services provider. 

It follows the Auckland truck shop Zee Shop being fined $108,000 for providing contracts which included “incomprehensible” clauses.

Zee pleaded guilty to seven charges under the Credit Contracts and Consumer Finance Act 2003, for failing to disclose key information and failing to express key information clearly and concisely.

The Commerce Commission says Ezitruck’s offending occurred between June and November 2015 when it entered into about 3,000 contracts with customers for household goods from its truck shop, paid for over time. The contracts failed to give customers important information including accurate payment details and descriptions of the securities being taken, as required under the Credit Contracts and Consumer Finance Act 2003 (CCCFA).

During this period Ezitruck was not registered as a Financial Service Provider and had not joined an approved dispute resolution scheme as it was required to do under the Financial Service Providers (Registration and Dispute Resolution) Act 2008. 

In sentencing in the Manukau District Court, Judge Noel Sainsbury noted that while Ezitruck relied on legal advice regarding the construction of its contracts, it remained the responsibility of the company to ensure it complied with the law. 

“The CCCFA is there to protect consumers and is of the upmost importance for good commercial management throughout the country, and for that reason the breaches are considered serious,” Judge Sainsbury said.

Commissioner Anna Rawlings has welcomed the sentence. “The contracts were difficult to read and the key information was obscured. This meant the documents failed a basic requirement of the law, which is intended to assist borrowers to understand what they are signing up to.

“Ezitruck’s failure to join an approved dispute resolution scheme also meant borrowers did not have access to a free avenue for resolving disputes with the company, as the law requires.  It is important that lenders provide their customers with access to a scheme to help resolve issues if things go wrong.”

The company was ordered to refund costs of borrowing paid by customers who entered into contracts between 6 June and 13 November 2015, as well as being barred from receiving any further credit, default or dishonour fees for contracts entered into during that period.  

Ezitruck was one of 32 traders identified in the Commission’s 2014/15 Mobile Trader project. Subsequent prosecutions against 11 mobile traders have resulted in more than $1.1 million of fines being handed down by the courts.

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