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Govt must take harder line on ‘clothing trucks’

15 December 2009
Media Statement

Govt must take harder line on ‘clothing trucks’

The Government needs to ensure a harder line is taken against mobile clothing trucks after renewed concerns they are “financially trapping” hundreds of vulnerable families, says Labour’s Consumer Affairs spokesperson Carol Beaumont.

“The Manukau Courier today reported that the Mangere Budgeting and Family Support Services had reported a major increase in the number of its clients being trapped in unserviceable debt situations.

“The agency is reported saying that about 140 clients were affected last year, but that the number had jumped to more than 500 this year. That’s just in Mangere.

“The home vendor trucks are typically fitted out with clothing and a range of other products - including food and electrical appliances - and enable customers to enter into credit arrangements to pay for the goods,” Carol Beaumont says.

“They typically target vulnerable families on low incomes who can’t afford to buy the goods outright and often have problems accessing other credit.

“The prices charged by these mobile vendors are often much higher than they would be in the shops and the families they target end up in bigger debt and more trouble.

“In 2007 the Commerce Commission warned four companies operating the trucks that they may be breaching the Credit Contracts and Consumer Finance Act (CCCF Act) by failing to disclose important information to customers about the credit arrangements they were signing them up to – including the security interests taken over people’s assets.

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“In 2008 the Ministry of Consumer Affairs reviewed the issue as part of a wider investigation of fringe lending practices and said anecdotal evidence suggested the prices being charged were three to four times the normal price charged in retail outlets,” Carol Beaumont says.

“It found budget advisory services and Citizens Advice Bureaux had identified a number of ongoing problems with the trucks.

“The Government is currently reviewing the CCCF Act and I’m calling on it to ensure a harder line is taken when it comes to regulating this industry, as well as ensuring that current obligations under the Act are met.

“I support suggestions made in the discussion paper that property secured against a loan must be specifically defined in credit contracts, so people know what can be repossessed if they default on loans.

“And I’d like to warn families targeted by these companies to think very hard before being bullying into buying goods they can’t afford,” Carol Beaumont says.


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