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Computer retailer Gateway fined $21,500

Issued 6 November 2000/110

Computer retailer Gateway fined $21,500: second company convicted for small print in a week, warning to all advertisers

The Commerce Commission says that the conviction of two companies in a week for small print issues should be seen as a warning to all advertisers: small print cannot save advertising from being misleading.

The Auckland District Court today fined computer retailer Gateway New Zealand Limited $21,500 for breaching the Fair Trading Act by describing compulsory additional costs in small print only.

Last week the Dunedin District Court fined Air New Zealand subsidiary South Pacific Air Charters Limited, which trades as Freedom Air International, $4,000 for its use of small print.

Commerce Commission Chair John Belgrave said that misleading use of small print is a common problem on which the Commission will continue to focus its attention.

"Consumers must be able to rely on the overall impression created by advertising," Mr Belgrave said. "All important conditions must be clearly and accurately disclosed. If the information in small print is important, then why is it in small print?"

Mr Belgrave said that in one of the earlier cases that set important small print precedents the judge stated: "small print cannot save a representation from being misleading."

In that case the judge said that he ignored the fine print, looked at the impression the advertising made on the consumer and asked "is that misleading?"

Today in Court, Gateway admitted that its advertising was misleading. It listed compulsory delivery costs in small print only. Customers could not buy computers at the prices advertised-they always had to pay an additional $45.

Gateway published its advertisements in Infotech Weekly, the New Zealand Herald, the Dominion and the Evening Post from March last year to February this year.

"Misleading claims like those made by Gateway can harm consumers in two ways," Mr Belgrave said. "First, they are likely to be induced to purchase by misleading claims about the total cost. Secondly, they are unlikely to be able to accurately compare competitors' prices.

"And this second point also harms competitors-they may lose sales to a rival making misleading claims.

"For these reasons we will continue to take action as appropriate against small print problems," Mr Belgrave said.

Media contact: Fair Trading Manager Ross McPherson Phone work (04) 498 0909,

Communications Officer Vincent Cholewa Phone work (04) 498 0920

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