Commerce Commission sets sights on truck shops, alternative lenders in coming year

Wednesday 11th November 2015

Mobile truck shops, payday lenders and peer-to-peer lenders will be a focus for investigation in the consumer area by the Commerce Commission in the next year.

Chairman Mark Berry today outlined what areas the commission will give priority to in the next six-12 months at a stakeholder briefing in Auckland, with truck shops at the top of the list.

The commission released a report in August after a year-long investigation of mobile traders which found the 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. Of the 32 mobile traders investigated, 31 were found to not comply to some extent with their obligations under the Fair Trading Act and Credit Contracts and Consumer Finance Act.

Berry said the first phase of understanding the industry and educating traders on compliance was now over and the second phase was enforcement.

“We will be giving truck shops priority,” he said.

Similarly, payday lenders who are also covered by new consumer credit and finance laws, have had sufficient time to understand rule changes and how they apply to loans and the commission will now be moving to enforcement, Berry said.

Four peer-to-peer lending providers have gained approval to operate in New Zealand from the Financial Markets Authority and Berry said the commission was reviewing fees and disclosures on standard terms and conditions on lenders’ websites, particularly given an increase in mobile applications that make credit easier to access for consumers. Berry said the commission should have completed its views on how and whether the new laws apply to peer-to-peer lending by the end of this year.

The commission is already facing one of its busiest ever periods for litigation with 12 cases currently before the courts and it expects to file charges in relation to a further 10 cases before the end of the year. One of those is likely to be the first case relating to substantiation claims under the new provisions given to the commission. It’s illegal for traders to make a representation about a goods or service without any reasonable basis.

Online trading, which has been identified this year by the commission as one of the highest risk areas for consumers, continues to be a focus in the coming year. The number of complaints about online trading has doubled over the past five years, and Berry said in the past year alone, a third of Fair Trading Act complaints related to online trading which is three times the complaints relating to physical stores. The current focus is on the credit terms being offered online.

A review of unfair contract provisions in a range of industries from telecommunications and retailers to gyms and carparks turned up 191 potential unfair terms but the commission was getting a good response from companies found to be in breach, Berry said. The commission will report publicly on that work, which is on-going, early next year.

When asked whether the commission had sufficient resources to investigate its large workload – with 10,000 complaints a year and 463 investigations carried out in the past year - Berry said there is a filtering process because the commission has never had the resources to investigate all complaints.

The process on which complaints are chosen for investigation is transparent and outlined on the commission’s website, he said, and it comes down to those that indicate the most serious harm to consumers.

BusinessDesk.co.nz

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