ABC Motor Group convicted for second time

ABC Motor Group convicted for second time under Fair Trading Act: fined $31,000

ABC Motor Group Limited has been convicted of breaching the Fair Trading Act for the second time in three years over failure to adequately disclose important conditions in advertising.

ABC Motor Group today pleaded guilty in the Auckland District Court to ten charges of breaching the Fair Trading Act. Judge Kiernan fined the company $31,000 plus $2,800 costs and fees, stating the offending involved a "particularly brazen breach with all the appearance of being deliberate and in full knowledge of its legal obligations".

The charges, laid by the Commerce Commission, related to full-page and double-page advertisements placed by ABC Motor Group in The Motor Buyers' Guide between June and August 2003. ABC Motor Group ran a banner headline that advertised $3,000 cash back and 'half a beast' (ie half a cow for the freezer) along with pictures of vehicles. The offer, however, did not apply to these vehicles.

In nine of the 10 advertisements, the fact that the offer did not apply to the pictured vehicles was referred to in the small print at the foot of the advertisements. In the tenth advertisement, the only disclosure was that 'special conditions apply'.

Chair Paula Rebstock said that given ABC Motor Group had already been convicted under the Act for similar behaviour, the Commission was disappointed the company had re-offended.

"Businesses that re-offend can expect strong enforcement action from the Commission and should also bear in mind that the maximum penalties for breaching the Fair Trading Act were doubled last year to $200,000 for companies and $30,000 for individuals," she said.

"Small print should not be used to materially alter the impression created in the main body of an advertisement."

Judge Kiernan commented that the defendant had planned to attract customers with untrue statements and it was apparent there must have been premeditation in the drafting of the advertisements because of the fine print disclosure in all but one of the advertisements. The defendant "clearly knew its legal obligations".

"By its nature it was aimed at attracting customers," Judge Kiernan commented. It was therefore the "very kind of breach that goes to the purpose of the legislation - to protect consumers and rival traders".

Background

In May 2001, the Auckland District Court fined ABC Motor Group Limited, trading as ABC Direct Imports Motor Group LMVD, $13,500 for misleading advertising, in breach of the Fair Trading Act.

The company used newspaper advertising to promote an offer of $6,000 off car prices or a $6,000 minimum trade-in. The advertisements featured photographs, specifications and prices of cars. Small print stated that the special offers did not apply to the cars featured in the advertisements.

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