Clothes trucks 'a trap'
Mobile clothing trucks are "financially trapping" hundreds of unwary Manukau families.
Mangere Budgeting and Family Support Services and the Auckland City Mission's Otahuhu office say home vendor trucks "are the common element" cited by clients "trapped in unserviceable debt levels".
People end up paying off their bills at the expense of basic living needs such as food - and their numbers are increasing fast, says mission team leader Stephen Coward.
Mangere Budgeting Services chief executive Darryl Evans says last year about 140 clients were trapped by the clothing trucks but this year the number has gone up to more than 500.
Many people targeted have neither the financial literacy to understand the contracts they're signing nor the awareness to seek advice before signing, Mr Coward says.
"I believe operators use this knowledge to manipulate needy families into buying up large on the mobile clothing trucks.
"These contracts then add to the existing debt burden and become a trap that stays," Mr Coward says.
And the number of clothing trucks operating in south Auckland has risen from two or three five years ago to close to 30 today, Mr Evans says.
"Often these businesses target vulnerable communities given that they know the plight many are in financially.
"One reason families use them is that once they've paid their essential items such as rent, power and food, there is rarely anything left to buy clothes or electrical goods.
"And so they feel like they have no other options, given that they often have bad credit and can't access loans or hire purchase or credit cards."
But Mr Evans says it isn't all about the consumer.
"Rather it's about unethical behaviour and pressure placed by mobile shop operators upon these consumers to buy big.
"Prices charged for goods that one can buy at The Warehouse for $29.99 will range from $69.99 to $90 at the mobile truck."
He's even more alarmed that some of the trucks are now selling food "which is excessively high-priced".
Families are being encouraged to spend more than they can realistically afford to repay, he says.
"Many families have to sign multiple automatic payment forms, which mean even if you finish paying for the goods, often these are reloaded so that you pay more than you need to.
"Once you realise this and that you're in credit, the companies advise the consumer they must spend the credit on the truck - reinventing the money wheel," Mr Evans says.
Both men lament the fact there's little or no regulation of the industry.
"I am pleased our complaints to the Commerce Commission last year were taken seriously and six companies were given warnings for their unethical and unprofessional practices," Mr Evans says.
"But this industry needs more regulation and monitoring to protect vulnerable consumers."
In the meantime, he advises families to seek early budgeting support and intervention.
"Budgeting helps families turn around their debt with the aim of empowering the individual or family to manage their own financial affairs and futures," he says.
"Living in debt is a learnt behaviour and we need to see much more education so we can break these tendencies and behaviours."
He also wants families to know their rights.
"These businesses are not allowed to cold call.
"If they come knocking at your property, you don't have to open your door to them.
"And if they become persistent, call the police."