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ANZ fined $7,500 for misleading MasterCard offer

ANZ Bank fined $7,500 fine for misleading MasterCard offer: campaign write-off costs $2.3million

ANZ Bank was fined $7,500 plus $1,130 costs in the Wellington District Court yesterday for breaching the Fair Trading Act in relation to a promotion offering nearly 10,000 of its existing customers an ANZ MasterCard with a pre-approved $5000 limit. In addition, Judge Tuohy acknowledged the bank had to write off $2.3million as a result of the campaign as a whole and had suffered the publicity attached to a prosecution.

Promotional material addressing each customer by name promised, “All you have to do is take up an ANZ MasterCard. We’ve already pre-approved you for a $5,000 limit, just complete the enclosed form…”

The Commerce Commission initiated the investigation based on information provided by a Citizens Advice Bureau that a customer who received this offer and sent away an enclosed application form for the card subsequently had her application declined. This was because her income level did not meet minimum credit criteria.

The investigation revealed that ANZ’s method for identifying eligible customers was erroneous and that 850 of the original 9,998 customers targeted did not meet minimum criteria based on their income level.

In his sentencing, Judge Tuohy said: “I have no doubt that the average New Zealand bank customer would read the letter as an unconditional offer of an ANZ MasterCard with a $5,000 credit limit, which could be accepted merely by completing the application form. Indeed that was what the Bank intended it to be.

The Bank argued that the promotion was not misleading because its letter referred to terms and conditions stated in a sentence on the application form. Judge Tuohy, however, stated that “As far as the sentence in the application form is concerned, in my view the average New Zealand bank customer would see it as nothing more than the sort of standard small print jargon almost invariably included in standard form documents produced by financial institutions.”

“I am satisfied that the representation made was both false and misleading. In totality, the mistake is too extensive and too elementary in several respects to be described as reasonable,” said Judge Tuohy.

Commerce Commission Director of Fair Trading Deborah Battell said that while the breach was not necessarily wilful, the conviction sent two clear messages to businesses. “Firstly, businesses must clearly bring any conditions attached to an offer to a customer’s attention.” “Secondly, blaming a breach on a series of mistakes is not a reasonable defence. The mistakes that caused the ANZ’s problem demonstrated a clear lack of quality control in terms of compliance with the Fair Trading Act.”

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