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Review all direct debits with travel club Crownsta

Media Release

Issued 24 November 2001/119

New Zealanders advised to review all direct debits with travel club Crownstar International (NZ) Limited

The Commerce Commission strongly advises New Zealanders who have direct debit contracts with Auckland based travel club company Crownstar International (NZ) Limited to review their contractual arrangements as the company's activities may be in breach of the Fair Trading Act.

Crownstar closed its Auckland offices this month, and yesterday the Federal Court in Victoria froze the property and assets of Melbourne based Crownstar International PTY Limited and CC Travel Pty Ltd pending an investigation.

Crownstar is involved in the promotion and sale of travel, accommodation and services related to the travel industry.

"During an investigation, the Commission became concerned about Crownstar's method of operation and representations it was making about its services," said Commission Deputy Chair Paula Rebstock.

"We know that at least 40 of the 168 New Zealand members still have individual direct debit arrangements with Crownstar for outstanding amounts ranging from $1,900 up to $6,000. We urge these members to review those direct debits, and consider approaching their banks to seek a charge back on their most recent credit or eftpos transactions.

"As Crownstar is based in Australia and has no directors based in New Zealand it will prove very difficult and expensive for people to get their money back if Crownstar has breached the Fair Trading Act. It appears that most of the funds are held in Australia. The Australian authorities have told us that the frozen accounts include money paid in by New Zealanders.

"While there are similar schemes that may be legitimate, we remind people to be cautious and ask lots of questions when making any type of financial commitment," added Ms Rebstock.

Background The Commerce Commission began investigating Crownstar's New Zealand operation after receiving a complaint. The Commission executed a search warrant at Crownstar's Auckland premises on November 6. The following day the office closed indefinitely without any prior notification.

In the last week, the Commission has received a substantial number of complaints that some of the discounts and services offered by Crownstar were not available and members were not able to make contact with New Zealand or Australian representatives of Crownstar.

Crownstar is a travel club involved in the promotion and sale of travel, accommodation and services related to the travel industry. Through the use of telemarketing, it invites consumers to a ninety minute presentation. In return for attending, you are offered a gift as an incentive.

Crownstar promoted a business relationship with Budget Rentals, which was proven not to be true during the Commission's investigation. It also claimed to be a member of the International Air Transport Association (IATA), the Travel Agents Association of New Zealand Incorporated (TAANZ) which is not the case. It promoted discounts of up to 70% on accommodation as part of the membership, plus discounts on coach travel, theme parks, golf courses and various restaurants.

ENDS

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