Music website trader guilty of fraud
Online musical instrument store owner Andrew Marquet Taylor has been sentenced to 9 months home detention, ordered to pay more than $91,000 in compensation and fines in the Auckland District Court yesterday. Mr Taylor was also banned from using the internet for 3 months.
Mr Taylor pleaded guilty to four charges relating to misleading customers, accepting payment for goods he never intended to supply and failing to respond to a statutory notice. His sentencing was for charges brought by the Commerce Commission under both the Fair Trading Act and Crimes Act.
Between 1 January 2013 and 19 July 2013 Mr Taylor was the owner and director of GlobalSoundTrade Ltd, an online store which sold a large range of musical instruments and components. He promoted the products through the company while misleading consumers regarding prices, stock availability, delivery times and the provision of refunds. After the company was struck off, Mr Taylor continued to trade under the GlobalSoundTrade name until his websites were deactivated in January 2014.
In her sentencing Judge Kiernan acknowledged the premeditated and persistent nature of the offending. Her Honour emphasised the number of victims and the extent of harm caused by the offending.
Of 94 complaints made to the Commerce Commission about purchases made to Mr Taylor’s GlobalSoundTrade New Zealand and Australian websites, only four complainants received the goods that they paid for and seven received a refund after their orders were not fulfilled. The other 83 customers received no goods and no refund.
Commissioner Anna Rawlings said consumers were harmed when they bought from Mr Taylor’s online business in reliance on the information published on the website and in the belief that they goods ordered and paid for would be delivered.
“Mr Taylor’s offending started as a series of false claims about the purchase and delivery of goods. But this progressed to fraud when he began accepting purchases with no intention of fulfilling customer orders,” Ms Rawlings said.
“From March 2013 to October 2013 he received around $150,000 from New Zealand customers but our investigation found less than $8000 could reasonably be attributed to supplier payments. Mr Taylor ultimately admitted that he had been spending money received from consumers on his own lifestyle even though he was not providing them the goods that they had purchased.”
During its investigation the Commerce Commission found that despite advertising that the 5,000 to 8,000 products on his websites were generally in stock and ready to ship, Mr Taylor did not have more than 40 or 50 products in stock in New Zealand at any one time.
Instead, he operated a ‘drop shipping’ model where he ordered products primarily from overseas suppliers once a customer order and payment had been made. This meant it was almost impossible for customers to get purchased goods within the 7-14 day period advertised on the two websites.
Mr Taylor also inflated his own recommended retail price to make sale prices seem more attractive. For example a Roland TD-15KV Electronic Kit was advertised with a ‘list price’ of $6,499 when the actual ‘list price’ set by the New Zealand distributer was $4,699.
“Online shopping is now a routine part of life for New Zealanders and the Commission will continue to target businesses that are causing harm. Online traders need to ensure they can fulfil any orders they take within the time frames promised. Mr Taylor’s behaviour serves as a reminder to consumers to remain vigilant when purchasing online and buy from businesses they can trust,” Ms Rawlings said.