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Mobile traders may draw in consumers because they are convenient and offer deals that are more suited to their lifestyle. However, in recent years, mobile traders have come under scrutiny for offering unfair contracts and obscuring extra fees with their products. If you are a mobile trader, it is vital that you develop a compliance programme with your staff to be confident you are not breaking any laws, which could lead to costly and time-consuming legal proceedings later. Be sure to seek legal advice if you want expert assistance in this process. In the meantime, this article will provide a brief summary of the various laws that may apply to you as a mobile trader.

Who Qualifies as a Mobile Trader?

Mobile traders are sellers that do not have a base retail shop that they operate from. Instead, they go to the customer and sell goods in person. This would include sellers going door-to-door to find customers or operating from a mobile truck. Customers have the option to pay:

  • on a deferred schedule (i.e. pay the total price at a later date); or 
  • through a consumer credit contract.

For example, you may store your goods in a central warehouse and have a main office you organise your business from. However, if any part of your business involves sales people going to customers and offering products through a credit contract in person, you are a mobile trader.

From June 1st 2020, all mobile traders that sell goods via a credit sale are creditors, and these sales qualify as consumer credit contracts. Therefore, you must comply with all legal obligations attached to that status, such as the lender responsibility principles. Among other things, these require that you:

  • operate with care, diligence, and skill;
  • comply with all disclosure requirements;
  • make reasonable enquiries that the borrower can make their payments;
  • help borrowers and guarantors make an informed and considered decision;
  • charge reasonable interest and fees for high-cost loans;
  • act reasonably and ethically;
  • do not offer oppressive loans; and
  • comply with any other applicable laws.

For example, as a lender, you cannot ask a borrower to pay back twice the amount they borrowed or charge compound interest.

Clarity of Contract

A criticism of mobile traders has been that they offer complex contracts meant to confuse the consumer and get away with charging unreasonable prices. In some cases, regulatory authorities have charged mobile traders, resulting in fines of hundreds of thousands of dollars where those contracts were unfair.

Therefore, it is crucial that you are upfront with your customers about the nature of the credit contracts you offer and make sure they understand your terms and conditions. Use clear and concise language, and do not overwhelm them with unnecessary legal or commercial jargon. Customers are entitled to a full disclosure of key information before they agree to a contract, such as their right to cancel and total interest rates.

Ensure your contracts have all their essential terms and that your customers understand them. These terms include the:

  • names of all parties;
  • initial unpaid balance;
  • record of any payments already made;
  • total of the final payment;
  • exact payment schedule;
  • delivery rates and schedule;
  • required conditions of a contract cancellation; and
  • additional fees or interest rates.

For example, say that you sell smartphones with a consumer credit contract, where customers have to pay $20 a month until they pay back the full amount. You need to be transparent about any extra fees attached to that $20, interest rates and what the total final payment comes to be.

Layby Sales

If you sell a product through a layby sale, the rules are different. This is where customers pay for a product in instalments and do not receive the product until they have paid the specified amount. These sales have similar disclosure requirements, and customers have a right to cancel within five working days of agreeing to the contract. The contract must detail the total payable price and the date the customer entered into it. The front page of any layby sales agreement must include:

  • a clear product description;
  • your contact details; and
  • a summary of the customer’s right to cancel, including any attached fees.

Consumer Law

As a trader that sells consumer goods, you must comply with consumer law. Namely, the Consumer Guarantees Act and the Fair Trading Act.

This means ensuring your products meet their appropriate consumer guarantees and not engaging in misleading or deceptive conduct. If you deceive your customers or make claims you cannot back up with evidence, you could face severe financial penalties.

For example, if you sell whiteware, you must make sure it works properly and is fit for purpose. If not, you must provide customers with a remedy for faulty products.

Other laws may also apply depending on the mode of sale and the kinds of products you offer, so be sure to look into these extra obligations.

Key Takeaways

Mobile traders are facing increased scrutiny. With new law changes, you have different requirements for the contracts you offer. Take steps within your business to ensure compliance amongst your staff and do not attempt to hide extra fees from your customers. If you would like more information or help with your legal obligations as a mobile trader, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What are mobile traders?

Mobile traders are sellers that offer goods and services directly to their customers with a degree of mobility, operating from trucks or going door to door. Mobile trading has certain legal requirements that you must follow.

What is a layby sale?

A layby sale is a kind of deferred payment schedule. When you buy a product, you pay what you owe in instalments, and only receive the product and own it when you pay a specified amount.

What are consumer guarantees?

If you sell consumer goods or services, consumer guarantees are legal promises you make regarding these things. You guarantee that they are fit for purpose, and of reasonable quality, among other things.

What are the essential terms of a contract?

The essential terms of a contract are terms without which the contract would not exist. These can vary according to the parties, but usually, they include both the names of both parties and what is the item of value being exchanged, as well as the payment you are offering.

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