3rd Fair Trading furniture retailer prosecuted
Third Fair Trading Act prosecution of furniture retailer in a month:
Media Release 2000/35
The Commerce Commission’s prosecution of Waitemata Backcare Beds and Waterbeds Limited highlights one of the main concerns the Commission has about furniture retailing: "interest free" offers must be the same as the cash price.
"If
customers pay more for hire purchase than the cash price,
then it is not interest free," Commission Chair John
Belgrave said.
"Courts first ruled on this issue
many years ago, and have given the same decision many times
since," Mr Belgrave said. "It is false or misleading and a
breach of the Fair Trading Act to describe a hire purchase
offer as ‘interest free’ when customers must pay insurance,
booking fees administration costs or any other
charges.
"Retailers can impose fees and interest
but they must then disclose them clearly and accurately and
must not call it an ‘interest free’ offer.
"Such
false or misleading claims harm consumers and competitors
who accurately describe promotions. Consumers end up paying
more and honest competitors lose business
unfairly."
Waitemata Backcare Beds and Waterbeds
has been fined $3,500 by the Waitakere District Court after
admitting that its "0% interest free fiesta" was not
genuinely interest free—compulsory additional costs were not
disclosed in the advertising.
This prosecution was part of the Commission’s crackdown on what it believes are widespread Fair Trading Act problems among furniture retailers. It was the third prosecution in a month.
On March 31 the Napier District Court fined
Furniture Now Limited for advertising a "fantastic start up
package deal" but not providing all the items advertised,
and for describing pine furniture as "solid rimu". On April
11 the Upper Hutt District Court fined Hazelwoods Home
Traders Limited $15,000 for breaches similar to those
committed by Furniture Now.
"Last year we had many
meetings with retailers and the Retail Merchants Association
to explain the law and to help draft advertising guidelines
specifically for furniture retailers," Mr Belgrave said.
"The Association was highly co-operative and put a lot of
its own time into educating its members.
"We
followed up with settlements with retailers who were at risk
of breaking the law. Now we are taking prosecutions because,
disappointingly, some retailers have not
complied."
The most common Fair Trading Act issues
among furniture retailers are:
false or misleading claims about prices, including claimed "interest free" deals that are not genuinely interest free
false claims about the composition of furniture
not providing the goods advertised, and
offering gifts or prizes and not providing them.