MOBILE shops and money-lenders continue to exploit and invade the homes of the most vulnerable people in the Gisborne community, budget advisers here claim.
Home Direct, H.A.D Garments, Carmont Fashions and DTR are some of the companies accused of extending credit, cash loans and goods to financially-unstable people. The companies are also accused of using pushy salesmen who lock clients into unwavering debt traps.
The companies deny these allegations. They say salespeople are instructed to communicate payment contracts and interest rates with their clients.
They say they work with budget services and clients to plan affordable payment schedules. DTR, for example, says contracts are flexible to suit clients’ needs and it has a working relationship with Salvation Army budget advisers.
Gisborne Budget Advisory Services manager Lynda Markie says that from 422 new and ongoing clients in the past year, more than 60 percent are in debt because of loan sharks and mobile shops.
“They seem to target vulnerable people who have little understanding of how to manage their household budgets and do not often have the confidence to say no to pushy sales reps,” claims Ms Markie.
“They target people on low incomes who are tempted by a seemingly-easy and instant fix to ongoing issues of providing clothing and goods to their families.”
Home Direct general manager Jodi Comrie says it makes no commercial sense to lend to people who cannot afford the repayments because Home Direct would end up writing off the debt and taking a loss.
The Government issued a set of responsible lending guidelines in May last year but it has not stopped deceitful lending practices, says Ms Markie.
An example of this was when a budget services client was approached by a sales representative as she buckled her sick toddler into a car.
The representative would not accept this was not a good time to talk and the harassed client said she ended up signing the contract to get rid of him.
“At the time she was told the direct debit payments would be $10 a week.
“However, payments of $20 a week were taken from her bank account, which put the family into hardship.”
She says more underhand behaviour from companies is in the use of the word credit to lure clients into a false sense of financial security.
“Often people don’t understand what the word credit means,” says Ms Markie.
“Credit equals debt and they don’t realise how accepting credit is going to impact on their weekly budget.”
Another tactic used by door-to-door salespeople is to personalise their goods in order to pressure clients into a purchase or contract.
“We hear of sales representatives who become familiar with their clients by asking questions about their background — ‘which iwi do you belong to?’ or ‘I got this item especially for you because I know you wanted it’,” says Ms Markie.
“That is how people get trapped in a cycle of debt.”
Sales companies say that although their salespeople are paid on commission, they are instructed to not pressure clients into sales or contracts.
Carmont Fashion managing director Warwick Taylor denies his salespeople are at all deceitful in their relations with clients.
“Our salespeople are instructed not to be pushy and not to pressure people into buying our goods,” says Mr Taylor.
“Our sales contract states very clearly on the invoice that if they choose not to take our goods after signing the contract, they have a period of seven days to cancel the agreement.”
Salvation Army community ministries co-ordinator and budget adviser Bev Hauiti runs six-week life skills programmes for beneficiaries referred to the programme by Work and Income.
Most participants say they have been trapped into payment contracts by salespeople who at first appear as if they are serving their best interests.
The companies say they encourage clients to contact sale representatives on their 0800 numbers if they are having difficulty with payments, and that they are flexible in providing payment schedules that suit individual clients.
H.A.D. Garments representative Vicki Morgan says her company works with budgeting services regularly. After they received a phone call from a Gisborne budgeter last week, a customer’s $20 a week payment was reduced to $5.
DTR managing director Mark Spring says many of DTR’s contracts are unique in the flexibility they offer to terminate a contract early or alter terms to better fit the client’s changing needs.
Gisborne Salvation Army Lieutenant David McEwen says DTR has taken part in Salvation Army life skills programmes and a memorandum of understanding has been formed between the two.
“We have found DTR very flexible in arranging suitable repayment plans for our clients,” says Mr McEwen.
Gisborne budget advisers hope to achieve a win-win solution between creditor and client.
Budgeters and victims alike believe that having a more focused financial literacy programme in schools would educate and prevent financial despair.
“At the end of the day, we only catch the tail end of what happens,” says Mr McEwen.