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FAI Home Security fined $10,000 for false claims

FAI Home Security fined $10,000 for false claims that security guards would respond to home alarms

FAI Home Security fined $10,000 for false claims that security guards would respond to home alarms Media Release 1999/76

FAI Home Security Holdings New Zealand Limited was fined $10,000 in the New Plymouth District Court on Friday after it admitted making false claims that security guards would attend rural Taranaki properties if home burglar alarms were activated.

The Commerce Commission prosecuted FAI Home Security under the Fair Trading Act. The Act prohibits false claims that services are of a particular kind or quality.

Commission Acting Chairman Mark Berry said that the Commission had previously, in 1996, accepted a settlement from FAI Home Security in which the company gave signed undertakings, including that in future it would make no false or misleading claims about its security systems.

"Unfortunately, we received further complaints," Mr Berry said. "We investigated and decided that enforcement action was necessary."

FAI did not have contracts with security firms to respond to some rural Taranaki areas where alarms were sold.

A significant part of FAI Home Security's sales package was its emergency response service, "Extrawatch", being available at no extra charge for five years. The security systems cost between $2,540 and $2,800 each.

If an alarm at a house with the Extrawatch service goes off, neighbours are to telephone a 0800 number provided to them on a sticker. The call is connected to a call centre in Australia and a guard from a contracted firm is dispatched.

For some rural Taranaki people this was not possible - the security guards contracted by FAI did not cover their area. However, the Extrawatch service was promoted to them and they were told that a New Plymouth security firm would come to check their property.

FAI Home Security pleaded guilty to two charges of making such false claims. It was fined $5,000 on each charge.

Mr Berry said that the Commission strongly advises anyone concerned about responses to their own home security system to make two simple checks.

1. Contact the company that supplied the system and find out exactly what response there will be, and by whom, if the alarm goes off. 2. Contact the company or person who is to respond and find out how long they will take to respond and what their response will be.

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