The Sallies are so fed up with mobile traders preying on poor areas and trapping people into crushing debt that they’re firing back with a rival service.
When the Salvation Army first started in New Zealand in the 1800s it noticed the bakers of the day were exploiting people with extremely high bread prices. So, it threatened to open competing bakeries unless the industry brought its prices down.
It’s amazing how little has changed in 150 years.
The launch of the army’s first ethical shopping truck in South Auckland today is an all-out assault on the fleets of mobile traders that daily cruise around New Zealand’s low socio-economic areas targeting vulnerable consumers.
The Good Shop is a roving truck offering access to financial advice, safe credit and quality goods at no interest – a stark contrast to the 800% interest rates the church has seen in some mobile lenders’ contracts.
When it starts to see these predatory lenders disappear from the nation’s streets it will know it’s succeeding, says the director of the army’s Social Policy and Parliamentary Unit, Major Campbell Roberts. “This is about undermining that business model.”
The predatory lending industry is booming, increasing by 39% or $1.5 billion in the past five years, the army says. People get trapped in a cycle of debt by this lending because they have no other options.
“The Good Shop will provide a safe alternative solution to people who may struggle with transport, are unable to make upfront payments or can’t obtain credit from mainstream stores to purchase what they need,” project manager Jodi Hoare says.
The first purple and orange truck launches in the Manurewa area this week, with a second to follow in Wellington in June. The trucks are kitted out with two onboard computers and two budgeting advisers who will conduct an assessment with clients.
The Good Shop has partnered with Countdown and The Warehouse and will enable people to shop online for groceries and basic household items delivered at a discounted rate. Nearly a third of South Auckland homes have no internet access, The Good Shop points out.
If the consumer needs a bigger ticket item such as a fridge, instead of going to a dodgy lender The Good Shop can help them access safer credit options, says Ronji Tanielu, the Salvation Army policy analyst who developed the initiative.
Consumers will be able to apply for the army’s interest-free and low interest loans, backed by BNZ and micro lender Good Shepherd NZ. The scheme provides no interest loans of up to $1000 and low interest loans up to $5000, with two thirds of those who apply qualifying, Tanielu says.
Encouraging financial capability is a key part of The Good Shop’s aim, and teaching consumers how to access these services is all part of that, he says.
“We can’t force them to make these decisions, we have to try and change behaviour, so that comes with building financial literacy.”
The idea for The Good Shop was sparked as far back as 2012, and it’s taken this long to win hearts and minds within the Salvation Army movement and then to structure the initiative and form the necessary partnerships, Tanielu says.
There are other financial advice and budgeting services around, but vulnerable and elderly people don’t always have the means to access them. “That’s one of the unique circuit breakers of The Good Shop project, it’s taking this advice to the streets.”
Tanielu has seen it all in his time working with clients who have become entrapped by debt – such as the mobile lender who preyed upon mental health patients in a residential facility. “They couldn’t legally understand details of that contract,” he says.
“There’s real stories of them engaging with elderly people with English as a second language.
“Once you’re in the trap it’s difficult. We know of many clients who maybe have paid off their loan after years and intervention, but they’re still getting offers of credit every birthday, getting text messages, Facebook messages, emails.”
People basically know the mobile trucks are bad news, but “it’s really hard to make good decisions when all the options in front of you are bad options”, he says.
The army is looking forward to the proposed changes to the Credit Contracts and Consumer Finance Act, which may require mobile traders to pass a ‘fit and proper’ test and make ‘do not knock’ stickers legally enforceable.
The industry’s predatory nature has been allowed to flourish unchecked in New Zealand society, and that isn’t vulnerable consumers’ fault, Tanielu says. A 2015 Commerce Commission report found that 31 out of 32 mobile traders were breaking the law in some way. “That shows you the nature of their practices.”
Another of the army’s partners in The Good Shop is the Ministry of Social Development. “If we’re going to reduce the capability of predatory lenders there needs to be alternatives,” the ministry’s manager for family and community services, Gordon McKenzie, said at this week’s launch event. Asked by The Spinoff after the event for further comment, McKenzie declined to be interviewed and referred all queries to the ministry’s media team.
Minister of Commerce and Consumer Affairs Kris Faafoi has issued a statement thanking the Salvation Army for The Good Shop initiative.
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