Narva & Repco convicted for cashback offer
Narva and Repco convicted for misleading cash back offer
Narva New Zealand Limited and Repco Limited have pleaded guilty to breaching the Fair Trading Act in relation to a misleading Projecta battery charger cash back offer. The two cases were heard separately in the Auckland District Court with Narva fined $1,000 in June and Repco $5,000 yesterday.
Narva is a subsidiary of Australian company Brown & Watson International Pty Limited and distributes Projecta automotive accessories on its behalf to retailers in New Zealand. Repco is a nationwide retailer of automotive accessories.
The Commerce Commission laid charges against the two companies following an investigation into allegations of a misleading ‘$5 manufacturer’s cash back’ offer on Projecta battery chargers, promoted through Repco and other retail outlets between November 2002 and March 2003. The offer was promoted by a red sticker on the front of product boxes and in very small print it was stated that ‘conditions apply, details enclosed’.
Chair Paula Rebstock said when the packaging was opened, the only details enclosed consisted of a card that the customer was required to send to the Australian manufacturer, Brown & Watson.
“It was only after a letter was received
back from Brown & Watson that it was clear that the
$5 refund did not apply to the item purchased at that time, but to a future purchase of a Projecta product.
“Furthermore, any customer wanting to pursue the offer was required to post items to Australia on two separate occasions, at a cost of $1.50 each, before the $5 could be received,” she said.
“In the Commission’s view, with the conditions that went with it, the offer was far less attractive than customers were led to believe.”
Ms Rebstock said that the Commission was concerned to ensure that manufacturers, suppliers and retailers alike were aware of their responsibilities under the Fair Trading Act.
“It is important that New Zealand subsidiaries of offshore companies, such as Narva, understand their obligations under local law when promoting products and services in New Zealand.
“Retailers must also understand their obligations. In this case, although Repco did not design the promotion, by passing on the offer to customers, it was also liable,” she said.
In his reserved judgment on the Repco case, Judge Deobhakta stated, “The Act has been breached by having the offending sticker displayed on boxes for sale at its outlets. The wording on the sticker was literally correct, but it was misleading by not referring to the $5 being paid on the next Projecta purchase.
He also commented that while Repco had realised the true nature of the offer by May 2002, it made no approach to the suppliers about the misleading stickers until complaints were received in February 2003.