Under New Zealand law, specifically the Credit Contracts and Consumer Finance Act (CCCFA), you have the right to cancel a credit contract with a truck shop (mobile trader) within five working days of receiving the disclosure statement. This is known as the “cooling-off period.” Furthermore, the Consumer Guarantees Act protects you if the goods sold are faulty, not of acceptable quality, or do not match their description, entitling you to a repair, replacement, or refund regardless of the contract terms.
Understanding Your Rights: Truck Shops and NZ Law
Mobile traders, commonly known in New Zealand as “truck shops,” often provide goods on credit to consumers at their homes. While they offer convenience, they frequently charge significantly higher prices than standard retailers and attach high-interest credit contracts to these purchases. It is vital for New Zealand consumers to understand that despite the aggressive sales tactics often employed, you have robust legal protections.
Two primary pieces of legislation govern these transactions: the Credit Contracts and Consumer Finance Act (CCCFA) and the Consumer Guarantees Act (CGA). The CCCFA covers the money you borrow to pay for the item (the credit contract), while the CGA covers the quality of the item itself. Truck shops must comply with both. If they fail to disclose key information, charge unreasonable fees, or sell substandard products, the contract may be unenforceable.
Uninvited Direct Sales
Many truck shop sales fall under the category of “Uninvited Direct Sales.” This occurs when a trader comes to your home or workplace uninvited, or phones you, to sell goods or services on credit. If the price is more than $100 (or the price is uncertain at the time), specific rules apply under the Fair Trading Act. The most critical of these is your right to cancel the agreement within five working days after you receive a copy of the agreement.
The Cooling-Off Period: How to Cancel Immediately
If you have just signed up for a truck shop account or purchased an item on credit and are having second thoughts, you must act quickly. This is your strongest legal position.
What is the Cooling-Off Period?
The cooling-off period is a statutory window of time—usually five working days—starting from the day you receive your full disclosure statement. During this time, you can cancel the credit contract for any reason. You do not need to prove the goods are faulty or that the price is unfair. You simply need to notify the trader that you have changed your mind.
Step-by-Step Guide to Cancelling Under the Cooling-Off Period
To successfully cancel within this window, follow these precise steps:
- Do not delay: Count five working days from the day you received the paperwork. Do not include weekends or public holidays.
- Put it in writing: While you can call them, a written record is essential for legal proof. Send an email or a registered letter.
- Return the goods: If you have already received the item, you must return it. The trader cannot charge you for the cancellation, but you must take reasonable care of the goods until they are returned.
- Pay the cash price (rare): If you want to keep the item but cancel the credit (the loan part), you must pay the full cash price of the item within 15 working days. However, most people cancelling truck shop contracts want to return the item and cancel the debt entirely.
Warning: If the trader failed to give you a disclosure statement, or if the statement was incomplete, your cooling-off period has not yet started. You may still be able to cancel even weeks or months later.
Faulty Goods: Using the Consumer Guarantees Act
If the cooling-off period has passed, you cannot simply return an item because you changed your mind or found it cheaper elsewhere. However, if the item is broken, poor quality, or not what was promised, the Consumer Guarantees Act (CGA) applies.
Acceptable Quality Standards
The CGA requires that goods must be of “acceptable quality.” This means they must:
- Do what they are made to do.
- Be acceptable in appearance and finish.
- Be free from minor defects.
- be safe and durable.
Truck shops often sell lower-end electronics or furniture at premium prices. High price does not always equal high quality, but the law takes the price paid into account. If you paid a premium price for a “high-end” stereo system from a truck shop and it breaks within three months, it is likely not of acceptable quality.
The Repair, Replace, Refund Hierarchy
If a product fails, your remedy depends on the severity of the failure:
- Minor Failure: If the problem can be fixed easily and quickly, the truck shop can choose to repair it, replace it, or refund you. They must do this within a reasonable time.
- Serious Failure: If the problem cannot be fixed, or is substantial (meaning you wouldn’t have bought it if you’d known), you get to choose the remedy. You can reject the goods and demand a full cash refund (or a credit reversal), or keep the goods and ask for compensation for the drop in value.
Crucially: A truck shop cannot force you to accept a credit note or an exchange for other goods if the failure is serious. You are entitled to have the debt wiped or money returned.
Stopping Automatic Payments (Banks and WINZ)
One of the most difficult aspects of cancelling a truck shop contract is stopping the flow of money. Truck shops often set up Direct Debits or, for beneficiaries, Direct Deductions via Work and Income (WINZ).
Stopping Direct Debits at Your Bank
You have the authority to stop a direct debit on your account. The truck shop does not need to give permission for this.
- Action: Log into your internet banking or call your bank immediately. Cancel the specific direct debit authority.
- Caution: Stopping the payment does not legally cancel the contract. You must still send the cancellation letter (see templates below). If you stop paying without cancelling the contract, the truck shop may send the debt to a collection agency. Always do both simultaneously.
Stopping Payments from Work and Income (WINZ)
If your payments are coming directly from your benefit, you must contact Work and Income.
- Action: Contact WINZ and instruct them to stop the redirection. You can usually do this via MyMSD or by phone.
- Your Rights: You have control over your benefit. A creditor cannot force WINZ to continue paying them if you have withdrawn your consent.
Dealing with Harassment and Unfair Contract Terms
If you cancel a contract or stop payments, some aggressive traders may attempt to harass you or claim you cannot cancel. They might point to a clause in the contract that says “No Refunds” or “All Sales Final.”
These clauses are illegal. You cannot sign away your rights under the Consumer Guarantees Act. If a contract attempts to contract out of the CGA for a consumer purchase, that clause is void.
Dispute Resolution Schemes
All lenders in New Zealand, including truck shops, must belong to a dispute resolution scheme (such as the Insurance & Financial Services Ombudsman – IFSO, or Financial Services Complaints Ltd – FSCL). These services are free for you to use.
If a truck shop refuses to accept your cancellation or refund:
- Ask them for the name of their Dispute Resolution Scheme.
- Tell them you will be lodging a formal complaint.
- This often motivates them to resolve the issue quickly, as complaints cost them money to process.
Template Letters for Cancellation
Use these templates to formally notify the truck shop. Copy and paste the text, filling in your details.
Template 1: Cancelling within the Cooling-Off Period (5 Days)
To: [Name of Truck Shop Company]
Date: [Date]
Subject: CANCELLATION OF CREDIT CONTRACT – [Your Name]
Dear Sir/Madam,
I am writing to exercise my right to cancel my credit contract under section 27 of the Credit Contracts and Consumer Finance Act 2003.
Contract Details:
Name: [Your Name]
Address: [Your Address]
Date of Agreement: [Date you signed]
Item Purchased: [Description of item]
I am providing this notice within the statutory cooling-off period of 5 working days. I have cancelled the automatic payment authority with my bank/WINZ effective immediately.
Please contact me to arrange the collection of the goods. I expect written confirmation that this contract has been cancelled and the debt balance reduced to zero.
Regards,
[Your Name]
Template 2: Rejecting Faulty Goods (Consumer Guarantees Act)
To: [Name of Truck Shop Company]
Date: [Date]
Subject: REJECTION OF GOODS – [Your Name]
Dear Sir/Madam,
I purchased a [Item Name] from you on [Date]. The item has developed the following fault: [Describe the problem].
Because this fault is substantial, I am rejecting the goods under the Consumer Guarantees Act 1993. The goods are not of acceptable quality as defined by the Act.
I am exercising my right to a full refund of all monies paid to date and the cancellation of any future payments owed. I do not accept a credit note or an exchange.
Please arrange for the collection of the faulty item and process my refund within 7 days. If this is not resolved, I will escalate the matter to your Dispute Resolution Scheme.
Regards,
[Your Name]
Frequently Asked Questions
How long do I have to cancel a truck shop contract?
You have 5 working days from the day you receive the full disclosure statement (contract details) to cancel without giving a reason. This is your statutory cooling-off period under the CCCFA.
Can I return goods if I just change my mind?
If you are within the 5-working-day cooling-off period, yes. If that period has passed, the store is not legally required to accept a return just because you changed your mind, unless the goods are faulty.
What if the truck shop refuses my refund?
If you have a valid claim under the CGA or CCCFA and they refuse, you should formally complain to their Dispute Resolution Scheme (e.g., FSCL or IFSO). You can also report them to the Commerce Commission.
Does the Consumer Guarantees Act apply to mobile traders?
Yes, absolutely. Truck shops and mobile traders are retailers under New Zealand law and must adhere to the Consumer Guarantees Act regarding acceptable quality and fitness for purpose.
How do I stop automatic payments to a truck shop?
Contact your bank to cancel a Direct Debit. If the payment comes from your benefit, contact Work and Income (WINZ) to stop the redirection. You do not need the truck shop’s permission to stop these payments.
Are truck shop interest rates legal?
While high interest rates are legal, they cannot be “oppressive.” The CCCFA protects borrowers from oppressive contracts. If the interest and fees are extremely high compared to market standards, the contract might be challengeable in court.