ASB Bank Fined: Third Small Print Case In 10 Days

Issued 8 November 2000/111

ASB Bank Fined $6,000: Third Small Print Case In 10 Days

Commerce Commission action against misleading use of small print continued today with the Auckland District Court fining ASB Bank Limited $6,000 for breaching the Fair Trading Act.

Commerce Commission Chair John Belgrave said that this was the third small print conviction in 10 days. Earlier this week Gateway New Zealand Limited was fined $21,500 and last week Air New Zealand subsidiary South Pacific Air Charters, which trades as Freedom Air International, was fined $4,000.

The Commission alleged, and ASB admitted in Court today, that ASB's advertisements were misleading as to the true cost of the "Economiser Home Loan Package". The true cost of the loans was more than the 7.1 percent advertised-additional costs were disclosed in small print only. The additional costs were a monthly loan fee, mortgage insurance and a 1 percent fee.

ASB published the advertisements in a nation-wide newspaper and television campaign in February and March this year.

Mr Belgrave said that misleading use of small print is a common problem, and Commission investigations and enforcement action will continue until compliance improves.

"All advertisers must be aware that the impression created by large text, pictures, colour, music and the other obvious elements of advertising is all important," he said. "If that impression is misleading, then small print will not stop the ad breaching the Act.

"Our advice is that all costs and important conditions must be clearly and accurately disclosed.

"If the style of advertising does not allow that, then the style should be changed. If the style cannot be changed and still convey the message, then some hard questions have to be asked about the message. How accurately does it describe the offer? And is it at risk of being misleading?

"The test the Fair Trading Act applies is what impression would consumers get from the advertising? The best policy is to ask that question before advertisements are published or broadcast, and change them if necessary."

Background

ASB broadcast the advertisements on TV1 and TV2 and published them in the Sunday Star Times, Otago Daily Times, The Press, Northern Advocate, Southland Times, Waikato Times, Bay of Plenty Times, Dominion, New Zealand Herald and New Zealand Herald Weekend Real Estate.

Section 11 of the Fair Trading Act prohibits misleading conduct in relation to services.

Media contact: Fair Trading Manager Ross McPherson Phone work (04) 498 0909, cellphone 021 627 909, home (04) 232 6004

Senior Advisor Communications Vincent Cholewa Phone work (04) 498 0920, home (04) 473 3827

Commission media releases can be viewed on its web site www.comcom.govt.nz

Regards Leo van Schyndel Records Officer Corporate Services Direct dial : (04) 498-0929 E-mail : leo.vanschyndel@comcom.govt.nz

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