Company Fined For Misleading Customers

Company Fined For Misleading Customers

A Waikato septic tank cleaning company and its Director have been fined a total of $28,500 for misleading customers.

Effluent Services Limited (ESL) and its current Director, Richard Gerritsen, pleaded guilty to breaching the Fair Trading Act in the Hamilton District Court on Tuesday, 26 February.

The defendants pleaded guilty to one breach each of s13 (f) for falsely advertising that ESL was 'Waikato's only certified code compliant liquid waste contractor' when the company was in fact not certified at the time.

ESL and Mr Gerritsen also pleaded guilty to breaches of s 13(g) of the Fair Trading Act for providing misleading information over the reasons why final invoices were considerably higher than amounts quoted (in some cases up to 300% more). In some cases ESL claimed that the extra cost was due to increased Council charges for effluent disposal. However the Council fees charged for waste disposal did not equate to the amounts charged by ESL in excess of its quotes.

Some customers were also told that the increased cost was due to the work being more complicated and taking longer than expected, the length of time since the tank was last emptied, or the tank being fuller than expected. However expert industry advice indicated that none of these reasons were likely to have significantly increased the amount of time to complete the work, and could not be used as a reason to justify the increased charge.

"Traders are free to set their own price for their services, but they must not mislead over the reasons for their charges," said Commerce Commission Chair Paula Rebstock.

"People hiring trades people with specialist knowledge and expertise trust them to provide quotes that have been prepared with accuracy and integrity. In this case, a business took advantage of their customer's lack of knowledge of what is involved in maintaining and cleaning a septic tank to make additional profit at no extra cost," said Ms Rebstock.

"Businesses must be both honest and accurate with the reasons they give for the price of goods and services. They must also provide truthful information about any approval or endorsement from the industry. Businesses that provide misleading information not only disadvantage their customers, but gain an unfair advantage over their competitors."
Background

The Fair Trading Act. The Fair Trading Act prohibits misleading or deceptive conduct and false or misleading representations. Section 13 (f) prohibits false or misleading misrepresentations about sponsorship, approval, endorsement or affiliation. Section 13(g) specifically prohibits false or misleading misrepresentations about the price of any goods or services. Companies found guilty of breaching provisions of the Fair Trading Act may be fined up to $200,000 and individuals up to $60,000.

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