SmartStore charged over its customer agreements

12 July 2016

SmartStore charged over its customer agreements

Mobile trader, Smart Shop Limited (trading as SmartStore) yesterday pleaded guilty to 11 charges brought by the Commerce Commission for its loan contracts and extended warranty agreements.

The charges allege inadequate disclosure of key information to customers about their loans and extended warranty agreements, and misrepresentations about consumers’ rights under the Consumer Guarantees Act 1993 (CGA). The charges were filed under the Credit Contract and Consumer Finance Act 2003 (CCCFA) and Fair Trading Act 1986 (FTA).

SmartStore sold electronic goods direct to consumers through a combination of door-to door sales and telemarketing. These goods were offered on credit, often to consumers who could not get credit in mainstream retail outlets. Salespeople “door knocked” for new customers and made repeat sales to existing customers through telemarketing.

SmartStore did not disclose key information to customers in their initial contracts or when their contracts were varied such as;

• the debtor’s right to cancel their contract

• the debtor’s right to apply for hardship relief; and

• the frequency of continuing disclosure statements.

The total contract price and the total amount of payments to be made to repay the loan were incorrect because they did not include the monthly administration fee and, if applicable, the weekly Smart Club membership fee.

SmartStore also offered consumers who purchased electronic goods membership in the “Smart Club”, for an additional $5 per week. Membership offered consumers a number of additional benefits. The Smart Club membership was an extended warranty agreement, as defined under the FTA. SmartStore was required to provide certain information about the extended warranty agreement, which they failed to do.

In addition, consumers were given false or misleading representations about the existence or exclusion of their rights under the Consumer Guarantees Act (CGA).

ends

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