Selena’s cell phone (Family Well Being)

Selena’s cell phone was only 18 months old, but had not been very durable. It was the only phone in the house and was shared between Selena and her 3 children. A truck vendor called ROA Company (not real name) sold her a cell phone from the photos in their catalogue, which according to the salesperson was good value at $300.

Selena had just started to attend a local financial literacy course and discussion happening in the class at that time was around this type of high pressure, high cost sale. Many examples were being shared within the class. This affected Selena to the point where she went home that day and canceled the sale using the 0800 number. Selena had not received the phone because the type of sale required her to make a set of payments prior to receiving the goods. ROA Company said they would cancel but that it would incur an administration fee which Selena accepted.

In Selena’s neighbourhood, many people are financially excluded. They do not typically go into retail shops because they cannot afford to pay cash for items. This means they can be widely out of touch about the prices for goods. Items sold door to door are not advertised in the catalogue at a full retail price but at a ‘per week’ cost. This is also how costs are quoted on their website.

The direct debit payments to ROA Company were canceled, but it was not possible to cancel with the company, not being able to get through on their phone. She then tried through her Budgeting Advisor (Financial Mentor) who sent off an email, which was not replied to either. The BA did get through by phoning subsequently. The conversation took the familiar line that serves to detract rather than help – ‘the customer has not been in touch about this.’

Despite Selena’s cancellation of the order, confirmed to ROA Company by the BA, the cell phone was delivered in March 2015. Selena explained to the ROA Company representative that she had canceled the order. Out of curiosity, she asked to see the item and to her surprise found it to be the very exact phone that she had bought 18 months earlier for $69 at The Warehouse. The sales person at her door said that this was unlikely and started to get a bit angry. But Selena had kept the phone packaging from the Warehouse phone, and she produced it, proving it was indeed the same phone. Her surprise turned to shock when the ROA Company representative told Selena that the debt she owed in total for the cell phone was $700, which was eventually canceled.

This reveals the layers of deceit door to door traders can practice. Selena would have recognised the phone in the catalogue if it had been a correct photo, and this is why catalogues shown at the door are not left with customer. But who usually keeps the catalogues to compare? And how could you pull out having already invested time and money into the sale. And what would you do when you are confronted on the doorstep with an aggressive and pushy salesperson. Would you know what to do?

Selena’s next purchase was through a retail shop with the assistance of a Ngā Tāngata Microfinance Family Well being loan.

She shopped around to find the best deal, including visiting second hand dealers in the area where she lived, but found that their merchandise was higher priced than buying new. The best thing about this shopping expedition was that the purchase was an item Selena and her children really needed.

Selena realised that this encounter with a truck vendor, compared with the experience of having the safe, fair credit of a NILS loan (or Family Well  Being) that opened up more options, had been a big financial lesson.

Note: all names including those of the loan companies have been changed. Any re-publishing of these case studies need the permission of Ngā Tāngata Microfinance Ltd.

Selena’s weekly budget:

Income
Family Tax Credit$330.98 (SP)
Plus occasional wage$239.92
$571
Expenditure & Debt
HNZ$97
Groceries$230
Power$35
Medical$5
School$20
Clothing$20
Petrol$37
Rego/WoF$20
Phone$25
Lawns$10
Misc$20
$519

This budget leaves up to $50 for a NILS (ABLS) repayment on a loan for vehicle repairs, WoF, and lounge furniture.