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False claims will breach Fair Trading Act

False claims about trade membership will breach Fair Trading Act

The Commerce Commission is reminding traders that falsely claiming membership or approval of a trade organisation is a breach of the Fair Trading Act.

Green Acres Trade Service Limited, a major franchising group offering a range of home services, has acknowledged its advertising, in both the Wellington and Auckland editions of the Yellow Pages, breached the Fair Trading Act by being liable to mislead the public into believing it was a member of the Electrical Contractors Association of New Zealand Inc (ECANZ) when this was not the case.

In a settlement with the Commission, Green Acres has agreed to publish public notices in the Dominion Post and New Zealand Herald apologising for any misunderstanding which the advertisements may have caused to members of the public.

The advertising, which promoted electrical services offered by Green Acres, featured ECANZ’s registered ‘ME Master Electrician’ and ‘Safepower Assured and roundel device’ trademarks. Green Acres was not a member of ECANZ and was not entitled to use the trademarks when the advertisements were placed, nor at any subsequent time during which the two editions of the Yellow Pages were valid.

Director of Fair Trading Deborah Battell said that Green Acres’ advertising gave the false impression to potential customers that Green Acres’ electrical services had endorsement from ECANZ and the benefits offered to customers through ECANZ membership.

“Customers may have chosen the service on the basis of the endorsement. This means that competitors who were legitimately able to offer their customers the benefits of ECANZ membership may have lost business.”

Ms Battell said that under the Fair Trading Act, any claims made by traders about memberships, sponsorships, approvals or endorsements that they or their employees possess must be truthful and accurate.

“Traders should claim membership or approval of trade organisations only if that membership has been approved and is current. When trade or professional membership organisations operate effectively, they can play an important role in providing protection for consumers. It is therefore important that those who pay their membership fees and are bound by their codes of conduct can receive recognition for that.”

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