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Credit Card Brochures Breached Fair Trading Act

BNZ Acknowledges That Its Credit Card Brochures Breached Fair Trading Act

In a settlement with the Commerce Commission, the Bank of New Zealand (BNZ) has acknowledged that a claim in its credit card brochures made a misleading representation to non-business consumers about their rights and breached the Fair Trading Act.

The misleading claim made by the BNZ was: "We are not responsible for any indirect, special or consequential losses caused by occurrences within our control".

Commission Chair John Belgrave said that the BNZ and other banks can be responsible for such losses and non-business consumers can be entitled to compensation and other remedies from their bank.

Mr Belgrave said that the Commission has withdrawn its court action against BNZ, in return for BNZ acknowledging that it breached the Act and writing to all its credit card customers advising them of the changes in its terms and conditions.

The misleading claims relate to BNZ's Visa, Mastercard and GlobalPlus credit cards, and were made in brochures titled Your Credit Card Terms and Conditions and Terms and Conditions of your GlobalPlus Card.

The Consumer Guarantees Act gives consumers legal rights to guarantees and remedies that must be provided and cannot be contracted out. Among these is the right for non-business consumers to claim for damages and losses caused by the reasonably foreseeable failure of a service.

Banks must not engage in conduct that might mislead consumers about their rights and remedies in the event of the bank's actions causing foreseeable loss or damages.

"The same applies to all businesses providing services to consumers," Mr Belgrave said. "If they are not sure about what guarantees and remedies they must provide, then they should get legal advice about both these Acts. The Consumer Guarantees Act gives consumers rights, and the Fair Trading Act prohibits misleading claims about those rights".

Background

In this case, BNZ has given the Commission signed undertakings:
* acknowledging that it breached section 13(i) of the Fair Trading Act
* that it has removed the statement from its credit card brochures
* that it will notify its credit card customers of the change in conditions
* to ensure that all its advertising and promotional material complies with the Act
* to provide Fair Trading Act workshops for its managers and staff
* to have the Commission publicise the settlement, and
* that the Commission could resume court action if the settlement is not honoured.

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) 477 0039

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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