Plumbing World Fined $10,000 For Misleading

22 August 2002

Plumbing World Fined $10,000 For Misleading Advertising

Plumbing World was fined $10,000 in the Palmerston North District Court today for breaching the Fair Trading Act in relation to a letterbox flyer circulated nationwide in September last year.

A Commerce Commission investigation prompted by several customer complaints revealed Plumbing World’s ‘half yearly bathroom sale’ flyers represented that there would be discounts of 25 percent off the recommended retail prices for showers and vanities when in fact the discounts at Plumbing World stores were much smaller.

The true discounts being offered on several products during the sale relative to the previous four months were only between 5 – 10%.

Director of Fair Trading, Deborah Battell, said that misleading claims regarding price savings were a regular source of complaint to the Commerce Commission.

“On many occasions, customers do not realise that the discounts being claimed are not accurate.

“Customers should be able to rely on the accuracy of representations made by traders,” she added.

Judge Lovegrove commented in passing down the sentence that he felt “a need to impose a penalty that is sufficient to act as a deterrent to such conduct.”

Background
Customer complaints to the Commission highlighted that the sales prices promoted in Plumbing World’s flyers did not correspond to a 25% discount off the recommended retail price advertised in the shower and vanity manufacturer’s product brochure, provided at Plumbing World stores.

The Commission discovered that in calculating its sales prices, Plumbing World had used ‘trade guild prices’, prices published by the Merchant Guild and much higher than market prices. Plumbing World had also previously calculated its retail prices by discounting down from these guild prices.

The investigation also revealed that Plumbing World’s usual selling prices ranged between the manufacturer’s recommended retail price and the price actually charged during the 25%-off sale. An assessment of the true discount being offered on several products during the sale as compared with the average price of the products during the previous four months was only between 5 – 10% .

Ends

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