Mobile truck shops

Mobile truck shops are targeting vulnerable consumers.

31mar mobile truck shops hero

Drive away from Mangere Town Centre in South Auckland into the streets fanning out from the suburban hub and it takes only 5 minutes to spot a mobile truck shop.

The trucks are large and their paint jobs in bright blocks of colours – yellow, red and navy – make them highly visible. The vehicles trawl the streets in low income areas, selling clothes, bedding, furniture and electronic goods and more recently food.

The companies running the trucks have been operating for many years in South Auckland and Porirua but have started in other centres including East Cape, Napier, Rotorua, Whangarei and Whakatane. The prices of the goods they sell are much higher than in shops.

Vai Harris, Vaiola P. I. Budgeting Service.

Vai Harris, service manager at Vaiola P. I. Budgeting Service, pithily sums up the crucial reason for the vehicles’ success: cash is not required. The companies all offer credit, meaning people can obtain food immediately even if they don’t have ready money.

Ms Harris says the other attractions of the trucks are they don’t do credit checks and they come to people’s homes. Families may not have a car, or it may be unreliable, or there may be no money for petrol, making going to the shops difficult.

Payment trap

Both the companies and the customers focus on weekly repayments required when goods are bought, rather than on the total amount to be repaid. Purchasers may not be aware of how much they will pay altogether: their emphasis is on the fact they believe they can meet the $20 or $30 a week payments.

This explains why people sign agreements to pay inflated prices for items they could buy far more cheaply in shops. Ms Harris has seen contracts charging $20 for a can of corned beef, $35 for a packet of noodles and $66 for powdered milk.

A 2014 Lync (NZ) Co Ltd contract obtained by Nga Tangata Microfinance Trust budgeter Linda McCallum lists prices ranging from $23.99 for biscuits to $49.99 for a rubbish bag pack (see “Overpriced”). A Shoppers Stop Lifestyle Ltd document records the prices of shoes as $100 and 3 pairs of socks at $30.

Mangere MP Su’a William Sio says there are cultural imperatives at play. “The biggest thing in most of our communities is the cultural aspect of not wanting to say no. It’s being hospitable to people who come up to the doorstep. As a result of that, these salespeople take advantage of that. It’s often worse when it’s somebody [the customer] knows because they feel an obligation and because there’s a sense I should trust this person because he is one of ours.”

Mr Sio says trucks selling food has a lot to do with poverty, inequality and families not having regular work hours. They might receive a week’s pay one week, but only a day’s pay the following week.

Ms Harris says prices charged for non-food items are also high. She had one Mangere client charged $990 for a 32-inch television when a 45-inch television could be bought in Manukau for $620. Another client bought 2 mobile phones for a total of $4500. When Ms Harris told her the items could be bought much more cheaply in a shop, the client replied she had no cash. A mother signed up to buy a bed for her daughter for $990, more than twice the price at a retailer. Ms Harris says that woman’s mortgage payment is the same amount as her income.

The documents often state the item won’t be delivered until after the purchaser has made 10 or 12 payments. Budgeters say sometimes items are never delivered. Free gifts promised may also fail to materialise. One of Ms Harris’ clients had paid $770 towards a TV but hadn’t received it. When Ms Harris spoke to the company, she was told the television was still on order.

Kevin Main of Budget Advisory Service (Whakatane) has recently dealt with cases in which the original documents have differed from the carbon copies. He says between $200 and $400 has been added to the debts owed for goods the customer didn’t purchase.

Mr Main’s budget service tries to cancel transactions and asks banks to place a note on accounts stating direct debits are not to be re-activated but he says banks are reluctant to do this.

Banking Ombudsman Deborah Battell says she’s been informed by Auckland-based budgeting services about companies getting people to sign multiple direct debits and has spoken to banks and officials about the problem. “The customer’s own bank will not know that multiple direct debits have been signed … it’s clear the public needs continued warnings about the practice.”

Industry compliance

The Commerce Commission says there are 40 companies operating mobile trucks.

Home Direct Ltd is the most established. It’s been operating since 1973 and has 150 staff and 72 trucks. Some companies are owner-operated businesses, operating under just-in-time principles so they only buy goods once a customer has committed to a purchase.

It’s not always clear what legal transaction the deal actually is. Some documents describe the transaction as a “rent to own agreement”. There is no such legal entity. Other transactions have characteristics of a layby sale, a consumer credit contract or a consumer lease but do not appear to fully comprise any one of these.

Consumer credit laws were tightened by the Credit Contracts and Consumer Finance Act 2003. The Act aimed to provide better protection to consumers after the Credit Contracts Act 1981 proved ineffective.

However, the 2003 law is also wanting and the government has had another go at reform. Part of the new law came into force in June last year and the rest – including a new responsible lending code – will take effect in June this year.

Recent law changes also introduced rules about door-to-door sales. However, the Commerce Commission’s opinion is these rules don’t apply if a mobile truck drives into a street and waits for people to come out to the truck, rather than the sales rep knocking on people’s doors. This is a significant loophole.

Commission investigation

The Commission began a 12-month project focusing on mobile trucks last year. Commission manager, competition, John Lyall, says the project aims to find out what’s happening in the mobile truck industry. A report is due in June.

Mr Lyall and senior investigator Jo Tilley say checks carried out during visits to traders indicate issues of non-compliance with the law. Some are minor but other traders are under investigation where breaches are likely to lead to enforcement action.

Ms Tilley says key issues are highly inflated prices and the quality is not what would be expected. It can also be difficult for consumers to find out total prices. She says the trucks target lower socio-economic areas. Companies get customers to complete multiple direct debit forms so if one is cancelled, another can be activated.

Other issues identified by the commission are high fees, ambiguous payment plans that do not include end dates and difficulties for purchasers in contacting the companies. The fee to get out of a $1300 deal can be as much as $600.

Ms Tilley says since the new laws took effect, the commission has been contacting mobile trucks to educate them about the provisions and check they’re complying.

Mobile trucks are also on the radar of some politicians. Commerce and Consumer Affairs Minister Paul Goldsmith visited the East Tamaki premises of a mobile truck company last December after hearing of widespread concerns about practices in the industry. A spokesperson for the minister says one of the problem areas in the money lending sector is irresponsible lenders offering loans to people who clearly cannot afford to repay. “That puts people and their families into impossible situations. The government is determined to crack down on unscrupulous lenders who take advantage of vulnerable borrowers and leave families in positions of incredible hardship.”

The spokesperson says it’s impossible to state with certainty whether all mobile trucks are compliant with the law, how many are not, or what breaches – if any – there are. He says the government has no plans to shut down mobile trucks. “It has, however, taken a number of actions recently to better regulate the activities of lenders, including door-to-door salespeople and mobile trucks.”

East Coast MP Anne Tolley says the issue is important to her as a local MP but believes it’s a problem for local government.

“[We] know of the long-term debt many of our vulnerable families on the East Coast incur as a result of mobile vendors. I believe local councils are best placed to deal with these trucks. I have written to the mayors in the Eastern Bay of Plenty part of my electorate and I am looking forward to working together on measures to curb the negative effects in the region, particularly in the suburban areas,” Ms Tolley says.

Exactly what role local councils could play to regulate these companies remains unclear.

Education efforts

Budgeters are divided on the efficacy of education about mobile trucks and financial literacy in preventing people from signing up to expensive deals.

Murupara Budget Advisory Service Trust manager Carolyn Meihana says educating the community is key. She advises clients to tell salespeople they need to speak to their budgeter before committing to buying. “Nine times out of 10, they leave then.”

She dealt with a case in which a small tablet computer was going to cost a total of $2500. When Ms Meihana queried the deal, the salesperson told her to beat it. “My client said ‘She’s my budgeter. You beat it.’ And she did.”

The service’s slogan is “Before you sign on the dotted line, think twice. Get budget advice”. Staff working in the centre have T-shirts with the slogan emblazoned on them.

However, Ms Harris and Mr Sua are less optimistic about the role of education. They say, as long as incomes are low and rents are high, desperate people will continue to sign up to expensive deals.

We say

  • Companies operating mobile shopping trucks are targeting some of the most vulnerable consumers.
  • The Commerce Commission should take enforcement action against these companies where there’s a clear breach of the law.
  • Door-to-door sales rules need to be strengthened so they cover trucks which drive into streets and wait for customers to come to them.

Report by Catriona MacLennan.

How they work

Operator Ubuy advertises many goods for sale on its website. The website homepage has a box stating “Sign up for the Ubuy specials. Make your dreams come true … Pay LESS for your favourite things. NO Credit Checks. NO Interest. NO hassle. EASY Weekly Payments.”

A lawnmower, vacuum cleaner, mattress and mobile phone are displayed. Next to each of the items, potential customers are told they can have the goods for a set weekly sum (“From $6.30” for a mobile phone). The full price of the goods isn’t stated.

The home page has tabs for entertainment, electronics, appliances, home ware, outdoors, mobile and toys. Clicking on a tab leads viewers to a page displaying different products. Once again, the only price information is how much the consumer will pay per week.

The Samsung Galaxy S111 can be bought on a “fast track” (26 weeks), “standard” (52 weeks) or “extended” (78 weeks) contract. The webpage advises customers they may be entitled to early delivery once 25 percent of their total order has been paid.

The “price” for the phone is $37.20 a week on fast track, $19.50 on standard and $14.95 on extended. A fast track customer would pay $967.20, standard $1014 and extended $1166.10. In our last market survey, we priced this mobile at $399.

One Ubuy contract lists the following fees:

  • delivery fee of between $5 and $500
  • establishment and booking fee of $50
  • Personal Property Securities Register fee of $3.07
  • administration fee of $25 for changes to the agreement requested by the purchaser
  • dishonour or missed payment fee of $15
  • $6 fee if Ubuy sends a letter about a default
  • selling costs (comprising the $50 establishment and booking fee, plus 8 to 10 per cent of the purchase price) when the agreement is cancelled after seven days and before the goods have been delivered.

Ubuy did not respond to our request for an interview.


A Lync (NZ) Co Ltd contract from May 2014 records the following prices for items supplied:

  • 1 fruit salad $14.99
  • 1 chips combo $14.99
  • 1 milk powder $34.99
  • 1 biscuit $23.99
  • 1 cereal $39.95
  • 1 drink pack $29.99
  • 1 rubbish bag pack $49.99

It’s easy to click on a supermarket website and compare how much more cheaply all the items can be bought from a supermarket. We phoned Lync and asked for its full price list. After a staff member checked with the owner, we were told the owner refused to provide this information.

The company later replied by fax that prices were for "bulk packages or combos". It said the rubbish bag pack contained 50 bags, disinfectant and two cleaning products.

Case studies

Peta Lee-lo and her husband have 5 children and live on her husband’s wage and family support. They bought an $800 dining table and 6 chairs from a mobile truck. They have been paying off the items for more than 2 years but have still not completed repayments. Each time a payment is missed, a dishonour fee is added to their debt.

Peta has also bought clothes for her children from the trucks including winter trousers, a jacket and socks. She says the vendor told her she wouldn’t be charged interest and she also liked the fact that the truck came to her door. The family is paying $10 a week towards the clothing debt and $10 towards what is owing on the furniture. Peta says once the money has been repaid, she will not buy from the trucks again. “Because of my account we’re not paying for groceries. I want to finish it.”


Maria Fagavaa has bought clothes for her son from the trucks. She was charged $180 for a jersey for her 17-year-old son and more than $150 for a pair of combat pants. She also bought a phone. Maria still has $600 of debt to pay off to the company. She is making payments of $20 a week but each time she misses a payment a $15 default fee is added to her debt. Maria is on a benefit and her youngest son still lives at home. Both he and her 35-year-old son have hereditary conditions which mean they will require dialysis for the rest of their lives. The 17-year-old has 4 hours of dialysis 3 times a week, returning from school in the afternoons and then heading to the clinic for treatment.

Maria says she bought from the trucks because her son needed clothes and because the mobile vendors did not require her to pay money upfront. She also thought it was important her son had a phone because of his health condition, and she didn’t have cash to buy a phone from a retail outlet. “I never do that anymore. I stopped it. When I finish [paying] that, no more.”

Te Pari

Te Pari Greaves is paying more than $200 a week on debts owed to mobile trucks and payday lenders. The young father has a three-year-old son and lives on a benefit of $395 a week, paying rent of $95. He says he buys “everything” from mobile trucks because he receives what he purchases instantly.

Te Pari has purchased food, clothes for his son, appliances and furniture from the trucks. “Now me and my son are living on $15 because of all the clothing trucks.”

He says he paid $500 for a barbecue hamper; $40 for a set of tomato, soya and Worcestershire sauces; and $30 for a packet of cornflakes or rice bubbles. Te Pari also signed up in November 2014 to buy a television, which he has yet to receive. He was told he would receive the TV before Christmas and started making payments of $25 a week from November but it has not yet been delivered. He says the mobile truck company told him it had not brought the television as he had missed some payments. Two weeks in a row, he has been promised that it would arrive “next week”.

He also bought a phone from a truck vendor, but the phone was stolen when he had just finished paying it off. The washing machine he bought broke down and when he tried to contact the vendor under the warranty, he was told the company had moved to Australia.

Te Pari’s debts are to multiple mobile trucks. He says he has no idea of how much he owes altogether. “They don’t give you the actual total amount. I’ve had enough of them. I’m trying slowly to pay them off and get rid of them. My son’s missing out.”


Palasi Taleo’s teenage son signed up to buy a phone from a mobile truck company. He didn’t receive the phone and Palasi took him to the bank to find out what was happening. They discovered $200 had been deducted from the son’s bank account in weekly sums of $25.

When Palasi rang the company, she was told that no one of the name given by the salesperson worked for the firm. Her son never received the phone and did not get his money back. “I told him ‘From now on don’t do anything when the salespeople come.’ You rather pay cash.”

Selling practices

1. Multiple direct debits
Some mobile truck shop operators obtain multiple signed direct debit forms from consumers. If buyers cancel one direct debit, the company activates another one. The Responsible Lending Code, which comes into force on 6 June, puts lenders on notice they should stop this practice.

2. Unexpected payments
Customers sometimes find unexpected payments made from their bank accounts. The Commerce Commission says some contracts have terms saying the company will debit the customer’s account indefinitely so the buyer can build up credit for other purchases. The commission considers these terms at high risk of being unfair and in breach of the Fair Trading Act.

3. Misleading ads
Some mobile truck shops advertise how easy it is to buy from them but fail to emphasise the full cost consumers pay. Ads include statements such as “easy to pay,” “no credit check” and “no deposit, no interest”. Some borrowers may only be aware of their weekly payments, not the total amount.

4. Fees
Some mobile truck shops have a range of charges such as delivery fees, establishment fees, administration fees, dishonour or missed payment fees, cancellation fees, account maintenance fees and field visit fees. These charges can significantly increase the price the consumer pays.

5. Inflated prices
Mobile truck shops began selling clothes and have expanded into bedding, toys, appliances, furniture and electronic devices. Some have also begun selling food. The prices charged for these items can be extremely high compared to buying from stores.

What the politicians say

Anne Tolley, National’s East Coast MP

Ms Tolley has met with and written to mayors and councils in the Opotiki, Kawerau and Whakatane districts and believes there is an opportunity “to work together to exclude mobile trucks from preying on our communities … Recent advice I’ve received suggests we can do something within the existing bylaws. My next move is to go back to the councils and look at how we might implement a change.”

David Shearer, Labour’s consumer affairs spokesman

Mr Shearer believes it’s a “cop out” to say mobile trucks are a local government issue. “This is something that should be addressed at central government level.” He advocates an immediate ban on the trucks selling food and says there should be compulsory registration and a code of practice.

Mojo Mathers, Green Party consumer affairs spokeswoman

The Greens are concerned about the exploitation of vulnerable consumers by mobile sellers, says Ms Mathers. “These companies appear to be deliberately targeting our most desperate people. It is great to see the Commerce Commission [is] investigating this issue and we will keenly watch its outcome. We believe these truck businesses need to be tightly regulated, either by council or central government.”

Marama Fox, Maori Party MP

Ms Fox says truck shops target low-income families who can’t see any other way to provide for whanau. “If you’re desperate for kai, if you’re desperate for clothes for your children, to get bedding and blankets, you go into these places.” She advocates comprehensive regulation of mobile truck shops, saying councils must act as they have a better understanding of local conditions than central government.

Darroch Ball, NZ First MP

New Zealand First is working on a policy on this issue, Mr Ball says. “We find it totally unacceptable, in any form, to take advantage of the needy and vulnerable in our communities. There is no other reason for the outrageous hikes in prices for essential items but to make a profit from those in need … We need to tackle this with legislation and education – it’s not a simple fix, but something needs to be done.”

Len Brown, Auckland Mayor

“Any sales practices that impact negatively on the wellbeing of at-risk Aucklanders are obviously of concern and we are keen to work with the government and other agencies on such issues,” Mr Brown says.

Alf Filipaina, Auckland councillor

Mr Filipaina believes central government is better placed to act against these traders than councils. He says mobile trucks prey on those who don’t have money and has met with a manager from the Ministry of Business, Innovation and Employment to discuss his concerns.

John Forbes, Opotiki Mayor

Mr Forbes believes a local solution is crucial and anticipates his council will work with the neighbouring Kawerau and Whakatane districts on a time frame for bylaw development. He says it’s important mobile shops don’t get pushed out of one area only to reappear elsewhere.

Member comments

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Maria O.
14 Jun 2015
Should be on the news!

This mobile truck shops are doing something criminal! Could Consumer put this on the media - TV news/newspaper ... more people need to know that and be aware. Something legal should be done about it!
Well done Consumer to show this and please spread to the world!