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Holiday Marketing fined $17,500

Media Release

Issued 31 May 2002/60


Holiday Marketing fined $17,500 for breaching
Fair Trading Act

Holiday Marketing International (NZ) Limited (HMI) was fined $17,500 plus court costs in the Auckland District Court today for misleading the public as to the nature of timeshare presentations it was promoting. HMI pleaded guilty to breaching section 11 of the Fair Trading Act.

A Commerce Commission investigation revealed HMI made misleading statements in its telemarketing, inviting members of the public to attend a travel show, when in fact they were being invited to attend a presentation to sell timeshare rights.

Over a twelve month period up until September 2001, the Commission received 23 calls regarding HMI’s activities, including 13 complaints that formed part of the investigation. It issued a warning to HMI in January last year.

Judge Kerr said that bearing in mind the warning letter, HMI’s conduct was a “flagrant breach” of the Fair Trading Act.

The Commission continues to receive complaints about timeshare promoters, and is concerned about problems in the industry resurfacing after a period of apparent low levels of activity.

Late last year it warned the public about Crownstar International – which has since ceased trading and left the country – and is about to lay charges against One World Leisure for similar behaviour.

“HMI’s telemarketers were fully aware that HMI was selling timeshares, yet described its presentation as a holiday show to entice people to attend,” said Deborah Battell, Director of Fair Trading at the Commerce Commission.

“A number of complainants asked direct questions about whether or not the promotion involved timeshares, and were deliberately misled,” she added.

“Traders have a responsibility to be truthful about what they’re actually promoting.” Ms Battell said. “The Commission will continue to take action against timeshare companies who mislead the public and would like people to report any further instances of misleading or deceptive behaviour to the Commission on 0800 943 600.”

Background

HMI is involved in the promotion and sales of timeshares, and solicits its customers through telemarketing and street surveys. HMI is a marketing agent for Worldwide Resorts (NZ) Ltd, Worldwide Resorts Club of New Zealand Incorporated and HMI Property Holdings Ltd.

Crownstar was a travel club involved in the promotion and sale of travel, accommodation and services related to the travel industry. The Commission 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 Crownstar representatives. The Commission executed a search warrant at Crownstar’s Auckland premises on 6 November 2001 – the following day the office closed indefinitely without any prior notification.

Section 11 of the Fair Trading Act prohibits trade or conduct that is liable to mislead the public as to the nature, characteristics, suitability for a purpose, or quantity of services.

ENDS

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