ANZ Investment Services fined for Bonus Bond promo
ANZ Investment Services fined for Bonus Bond promotion
ANZ Investment Services (New Zealand) Limited, a wholly owned subsidiary of ANZ National Bank Limited, has been fined $80,000 plus costs for running a misleading television campaign.
ANZ Investments Services had pleaded guilty to two charges of breaching the Fair Trading Act and was sentenced today in the Wellington District Court.
The campaign during November and December 2006 implied that the winner would receive $1million and a holiday home, when they were actually going into a second draw for a chance at winning those prizes.
The extensive advertising campaign, promoting a ‘Money and the Bach Summer Bonus Draw’ screened across the major television channels. The prize draw was valued at $1.5 million, and was additional to the standard Bonus Bond monthly prize draw. The advertising represented that people buying bonds before the end of December 2006 and retaining them until 31 January 2007 would be placed in a draw to win the major prize.
However, ANZ Investments Services intended to run a two tier prize draw. Eligible consumers would only be placed in an initial draw; the winner of which would go on to be placed in a second draw. The second draw, which was held at a later date, involved the winner of the first draw choosing from 100 envelopes – with only one envelope containing the major prize of $1million and a further $500,000 to go towards a bach. The other 99 envelopes contained a cheque for $10,000.
The television advertising strongly implied that $1
million and a bach was a prize which would be won when there
was only a 1% chance that it would be struck. The company
had provided the true
terms of the offer in small print for a short time at the end of the commercial however this was insufficient to correct the misleading impression created..
“Many consumers are influenced in their purchasing decisions by promotions and competitions, and consumers may have chosen to invest money in Bonus Bonds rather than other options, based on the possibility of winning a substantial prize,” said Commerce Commission Director of Fair Trading Adrian Sparrow.
“Gifts and prizes must always be described accurately, and the description must not mislead people into thinking that an advertised prize will be won if, in fact, this is highly unlikely,” said Mr Sparrow.
“Businesses invest in promotions to increase their market share and gain recognition for their brand. When they are devising promotional campaigns, businesses must ensure that any terms and conditions around a promotion or competition are unambiguous,” Mr Sparrow said. “Accurate information is essential so consumers can make informed choices about the products that they purchase.”
The Fair Trading Act
Section 17(a) of the Fair Trading Act states:-
“No person shall, (a) In connection with the supply or possible supply of goods or services…; offer gifts, prizes or other free items with the intention of not providing them or not providing them as offered.”
Court penalties for breaching the Fair Trading Act can include fines of up to $200,000 for a company and $60,000 for an individual. Only the courts can decide if a representation has breached the Act.
Bonus Bonds were introduced by the Government in the 1970 as a means of encouraging New Zealanders to save. ANZ Investment Services (New Zealand) Limited trading as Bonus Bonds, is a wholly owned subsidiary of ANZ National Bank Limited. The Bonus Bonds Trust, a unit trust through which the management of Bonus Bonds is administered.
The Bonus Bonds Trust differs from most unit trusts in that investment returns in the Bonus Bonds Trust are not distributed proportionally as income. Instead they are placed in a pool and distributed as tax-paid cash prizes to those holders of Bonus Bonds that are selected, at random, in the monthly prize draw. Until the monthly draw for April 2007 the top monthly prize was $300,000, and from May 2007, $1 million.