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Home Direct mobile truck shop
29 August 2018

Mobile trader’s “unfair” terms in spotlight

Commerce Commission seeking declaration mobile trader Home Direct's “voucher entitlement scheme” is unfair.

The Commerce Commission is going to court seeking a declaration mobile trader Home Direct used unfair terms in its consumer contract.

The retailer, which sells via mobile shops, online and by phone, signed up customers to its “voucher entitlement scheme” when they bought goods. Under the scheme, direct debit payments wouldn’t stop after goods were paid off. Instead, payments were turned into “voucher entitlements”, which customers were told could be used to buy more products from Home Direct.

However, the commission alleges the scheme’s terms are unfair under the Fair Trading Act. The “vouchers” couldn’t be refunded or exchanged for money, and expired after one to two years (depending on when the customer signed up). Unused credit would be forfeited to Home Direct.

“The commission seeks a declaration that these terms are unfair. In our view they create a significant imbalance in the rights and obligations of the parties and they are not reasonably necessary to protect the legitimate interests of Home Direct," Commissioner Anna Rawlings said.

The matter is now before the court.

This is the first declaration the commission has sought that a contract term is unfair since law changes banning unfair terms took effect in 2015.

The Fair Trading Act defines a term as unfair if it:

  • would cause a significant imbalance between the rights of the company and the consumer
  • is not reasonably necessary to protect the legitimate interests of the company
  • would cause detriment, whether financial or otherwise, to the consumer if it were to be applied or relied on.

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