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Fines for ‘Trade Register’ company and director

15 December 2004

$15,000 in fines for ‘Trade Register’ company and director

A company that targeted over 17,500 tradespeople throughout New Zealand inviting them to sign up to the New Zealand Trade Register, has been fined $10,500 plus $910 costs for making misleading claims under the Fair Trading Act. Its sole director, Gary John Solah has also been fined $4,500 plus $3260 costs.

Judge Kerr issued a reserved judgment in September this year, finding Trade Registrations NZ Limited and Mr Solah guilty on 10 charges of breaching the Act. They were sentenced in the Christchurch District Court this morning.

The Commerce Commission investigated the company in 2003 following concerns that the scheme was misleading businesses into believing they were required to sign up to what was a Government-run, or Government-endorsed register for a fee of $174 +GST. The Commission was particularly concerned that Trade Registrations appeared to be targeting businesses in the building and construction industries at a time in which there was widespread discussion about Government-initiated registers.

In May and June 2003, as part of its investigation, the Commission intercepted $56,644 worth of cheques, which have since been returned to the businesses concerned.

Chair Paula Rebstock said that Trade Registrations promoted the New Zealand Trade Register as an online solution to help all sectors access quality trade services. The company sent official-looking unsolicited letters with registration forms, inviting businesses to register. “In the Commission’s view, it was the defendants’ total approach to establish the appearance of an official process that would appear convincing to the consumers that it targeted – that consumers would think that registration and payment was something that was required.” Ms Rebstock said the Commission was concerned about what appeared to be an increase in overseas operators moving into the New Zealand market for short periods of time for the sole purpose of setting up misleading or deceptive schemes. In this case, Solah is based in Thailand and has run similar schemes in Australia and several other countries.

“Without the Commission’s intervention, the scheme could easily have made $400,000. The Commission will continue to take action where it can, but businesses need to remain vigilant and need to thoroughly check any offers made to them.”

In his reserved judgment, Judge Kerr said that given the number of forms businesses are required to complete for various government departments as well as the pressures of running a business, an office could hardly be blamed for assuming an official looking document needed to be completed and a cheque sent to the address given.

The defendants were also found guilty of charges relating to misleading claims made on the New Zealand Trade Register website that businesses listed on the site had been assessed against and found to have met quality standards, when this was not the case.

ENDS

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