If you buy from a mobile trader, you have the same rights as if you buy from a shop.
How they work
Mobile traders are businesses that do not have a retail shop. Some operate mobile trucks. Others use sales staff who sell products door-to-door using catalogues and brochures or sell on websites or Facebook pages.
Some mobile traders mainly operate in low-income areas, selling consumer products on credit, layby or other "buy now, pay later" terms. This can be an expensive way to buy everyday items. Check the total price you will pay — the weekly or monthly payments might be cheap, but the total cost might be much higher than in a shop.
All mobile traders are now treated as creditors and covered by the Credit Contract and Consumer Finance Act for high-cost loans. They must:
- check the payment plan, loan or credit meets your needs
- make sure you can afford repayments
- limit interest and fees.
For more information:
Common issues people find when they buy from mobile traders include:
- higher prices for household products than in the shops
- being pressured to buy quickly
- forms are often hard to understand and can have unfair terms
- extra charges such as default fees for missed or cancelled payments, and establishment fees
- not being told about fees, when payments start or end, outstanding balances, and the total price of the product
- low quality items
- continued payments by direct debit after the products are paid off
- traders are difficult to contact as they have no fixed premises.
Buying from a mobile trader or truck shop(external link) — Commerce Commission
Before you buy
The Commerce Commission has found many mobile traders are acting illegally, with forms that are hard to understand and that contain unfair terms. You can end up paying a lot more for things than if you buy them elsewhere, and it is easy for your debts to get out of control.
To minimise your risk before you buy:
- Check the total price of the item. Sometimes a trader will offer to let you pay an item off over time "interest free", but the total you pay will be more than it would cost to buy the item in a shop. For example, a phone might seem affordable at $30 a week, but over a year you will be paying $1560 — plus any fees or interest).
- Find out exactly when the payments should start and stop. Check your direct debit form matches up with these dates.
- Make sure you only sign one direct debit form.
- Check what fees are being charged, including what the fees are for late payments, early repayments, and set-up.
- If you can’t afford the payments, don’t buy anything.
- If you are not sure or are feeling pressured into buying something you don't want or cannot afford, tell the salesperson that you need to get some advice before you sign anything.
Your rights when you buy from a mobile trader
You have the same rights as if you buy from a shop.
Consumer Guarantees Act
Under the CGA, you have minimum guarantees and rights to sort out problems with the products. These include if the products or services are faulty or are not fit for purpose.
Fair Trading Act
Under the Fair Trading Act, you have protection from:
- false or misleading representations or statements
- unsubstantiated claims that have no basis in fact
- unfair sales practices.
You can cancel a direct debit at any time with your bank.
Direct debits and automatic payments
Buying on credit
Generally, if you get a product on the spot and pay it off over time, this type of sale is a consumer credit contract — and all the usual rules for consumer credit contracts apply.
When buying products or services on credit, you also have special rights under the Credit Contracts and Consumer Finance Act (CCCFA). This includes the right to:
- get full disclosure of key information before agreeing to the contract, e.g. total interest, your right to cancel, and to apply for relief if you suffer hardship
- change your mind and cancel the contract within five working days — but you would then have to pay the cash price upfront instead.
The CCCFA also says mobile traders must check the loan or credit meets your needs, and make sure you can afford repayments. Legal limits on interest and fees in high-cost loans mean:
- they cannot ask you to pay back more than twice the amount borrowed
- they cannot charge compound interest
- they cannot charge more than 0.8% of the unpaid loan balance in interest and fees per day when averaged across the loan term
- default fees for missed payments must be $30 or less.
You can apply to have your credit contract varied or cancelled if any of these rights are breached.
Contracts and sales agreements
If you pay several instalments and only get possession of the goods after you have paid the total price, this is more like a layby and your rights are different from that for a credit sale.
Uninvited direct sales
When a seller sells you something at your door from a catalogue and brochure, it's called an uninvited direct sale. Special rules apply to these types of sales.
Changes to legislation offer more protections for residents approached by door-to-door salespeople.
Your right to stop the door knockers – Consumer Protection
If things go wrong
Go back to the mobile trader to sort out the problem first.
Example — Unclear costs
Samesi buys a new DVD player on credit from a mobile trader who is operating in his street. He fills out a direct debit and signs a credit agreement without getting any information about the interest fees, when payments will end, the total cost of the products, or his right to cancel the agreement within five working days. Samesi is unable to keep up with the direct debit payments and gets advice. He finds out that the credit contract is not enforceable, and he can cancel the contract without having to pay interest or penalties, as he has not been given the full information required for credit contracts. He informs the trader of this, cancels the contract, and returns the DVD player.