Non Disclosure In Advertising Costs Repco $5,500
Issued 29 November 2001/120
Non disclosure in advertising costs Repco $5,500
Non disclosure of a daily fee and failing to mention that the advertised cell-phones were second hand has cost Pacific Dunlop Holdings Limited, trading as Repco, $5,500 in the Auckland District Court.
Repco pleaded guilty to breaching sections 13 and 10 of the Fair Trading Act in relation to the advertising of its "X-Cell Prepay Mobile" telephones. The advertisements claimed "call rates from just 39c minute!" and "no monthly charges". In addition, the advertisements made no mention that the phones were used.
A Commerce Commission investigation revealed there was an administrative fee of 35c per day charged to the prepay mobile, and that the phones under the prepay plan were reconditioned.
Commission's Director of Fair Trading Deborah Battell stressed that information presented to consumers needs to be accurate.
"Consumers need accurate information about both costs and the age of products when comparing offers," said Ms Battell. "The non-disclosed daily charge of 35c amounts to a significant monthly charge of $10.85. "Consumers are also entitled to assume that products are new if there is no indication in the advertising that they are reconditioned or used. "To decide between a new and used product consumers want to know about reliability, availability of components, ease of resale and, in some cases, whether there are any hygiene implications." The advertisement appeared in Repco's April 2000 catalogue. Over a million copies of the catalogue were printed and distributed nationally. Repco has 66 shops nationwide.
In the Auckland District Court, Judge Thorburn fined Repco $5,000 for the section 13 breach, and $500 for breaching section 10 of the Fair Trading Act. Repco was also ordered to pay combined court costs on the two breaches of $260 and solicitors costs of $500.