Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

2 Cheap Cars fined for “blatantly untrue" document

10 July 2019
Release No. 3

2 Cheap Cars fined $438,000 for “blatantly untrue and misleading” document, ads “tantamount to devious”

Used motor vehicle dealer 2 Cheap Cars Limited has been fined $438,000 for its use of “warranty waiver” documents and for its "liquidation sale" and “84% off” advertising claims.

2 Cheap Cars had earlier pleaded guilty to 10 charges under the Fair Trading Act 1986, following a Commerce Commission investigation opened in November 2017.

In a written sentencing decision* Judge Robert Ronayne in the Auckland District Court said the company made annual profits of more than $3 million and the Court’s response “should not amount to what might be considered a mere licensing fee or cost of doing business.”

Warranty waivers
Between 1 January 2014 and 31 December 2017 2 Cheap Cars routinely asked car buyers to sign a “warranty waiver” document if they chose not to purchase an extended warranty. The “waiver” included terms such as:
• “the vehicle you are purchasing does not include a warranty of any kind.”
• “I do understand that 2 Cheap Cars will comply with the Consumer Guarantees Act. I also understand that I am, and would prefer to be, solely responsible for any repair bills.”
• “if any repairs are carried out it will be done by 2 Cheap Cars [L]imited at a time of their convenience and that there are no courtesy cars provided.”
In fact, consumers had the protections of the Consumer Guarantees Act (CGA), which applies to used and new goods, including vehicles.

Judge Ronayne said the waiver “is blatantly untrue and misleading”and that “[b]y means of misinformation and untruths” the waiver creates an impression that unless an extended warranty is purchased “the purchaser had no rights. This must have been designed to encourage (unlawfully) the purchase of insurance product.”

The Commission estimates that consumers signed in excess of 20,000 warranty waivers during the charge period. 2 Cheap Cars stopped using them in December 2017 after being notified of the Commission investigation.

“2 Cheap Cars misrepresented consumers’ rights under the CGA. It should not have told customers they had no warranty of any kind and it should not have attempted to limit its liability for repairs in the way that it did. Conduct such as this puts pressure on customers to buy an extended warranty and deters them from returning to the seller for help if something goes wrong, even though they may have rights under the CGA. As Judge Ronayne notes, 2 Cheap Cars would have profited by avoiding its obligations to repair,” said Commission Chair Anna Rawlings.

Liquidation sales
In advertising for its 30 September and 1 October 2017 sales, 2 Cheap Cars made statements including:
• “Japanese imported vehicles liquidation sale”
• “2 Cheap Cars is in hot water, it must liquidate immediately”
• “A massive price drop this weekend!”
In fact, most of the 710 vehicles then for sale nationwide were not discounted at all or had discounts of as little as $5, and 2 Cheap Cars was not in, or going into, liquidation.

Judge Ronayne said this advertising was “deliberately misleading rather than simply careless” and “behaviour which was a complete departure from the truth.”

For the Commission Ms Rawlings said “this advertising was misleading because it suggested that many vehicles would be significantly discounted, due to the pressure of the company being in liquidation. Retailers should not encourage consumers to purchase with spurious calls to act urgently to take up a discount and they should not overstate the savings that are available when discounts are advertised.”

“84% off” claims
In January 2017 2 Cheap Cars’ newspaper advertising included the phrase “84% off”. The discount was not off the price of a vehicle but off the price of a $300 GrabOne voucher that could then be used towards purchasing a vehicle.

Judge Ronayne said this behaviour was “misleading and careless and, when viewed as a complete advertisement, tantamount to devious.”

*See documents tab on the Commission's case register entry

Background
Tip sheet for dealers
The Commission has recently released a tip sheet for motor vehicle dealers to help them meet their legal obligations.

Recent motor vehicle cases
The Commission has taken a number of recent enforcement actions against motor vehicle traders, particularly in regard to representations about consumers’ CGA rights:
• Vehicle Logistics was fined $75,000 in 2018 for conduct including that it advertised vehicles “as is where is” and/or that “no guarantee or warranty” applied
• $1 Reserve Cars and its owner Adam Cooper were fined in 2018 for conduct which included stating in vehicle listings that “As this is an auction for a complete package of second hand parts the Consumer Guarantee’s [sic] Act does NOT apply.”
• Earlier this year Taieri Motor Court was warned about representations made in Facebook advertising of vehicles, such as the distance a vehicle offered for sale had travelled.

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

DIY Law: Government Exempts Some Home Improvements From Costly Consents

Homeowners, builders and DIYers will soon have an easier time making basic home improvements as the Government scraps the need for consents for low-risk building work such as sleep-outs, sheds and carports – allowing the construction sector ... More>>

ALSO:

Media Awards: The New Zealand Herald Named Newspaper Of The Year, Website Of The Year At Voyager Media Awards

The New Zealand Herald has been labelled a “powerhouse news operation” as it claims the two biggest prizes – Newspaper of the Year and Website of the Year – along with many individual awards at the 2020 Voyager Media Awards Website of the ... More>>

ALSO:

ASB Bank: ASB Takes The Lead Again With New Low Home Loan Interest Rate

ASB has moved again to support its customers, cutting a number of home loan rates, including the two-year special rate to a new low of 2.69% p.a. Craig Sims, ASB executive general manager Retail Banking says the reduced rate will be welcome news for many ... More>>

ALSO:

Nathan Hoturoa Gray: The Problems With Testing And Case Statistics For Covid-19

To begin to understand disease transmission in a country requires adequate testing of your population with properly vetted, accurate tests. As the world struggles to find what 'adequate percentage' of the population is necessary, (estimates predict ... More>>

ALSO:

RNZ: Fletcher Building To Lay Off 1000 Staff In New Zealand

The construction company will cut around 10 percent of its workforce as it struggles with the fallout from Covid-19. More>>

ALSO:

Can Pay, Won't Pay: Cashflow Moves Urged

Government Ministers are asking significant private enterprises to adopt prompt payment practices in line with the state sector, as a way to improve cashflow for small businesses. More>>

ALSO:

Gordon Campbell: On Why We Should Legally Protect The Right To Work From Home

For understandable reasons, the media messaging around Level Two has been all about “freedom” and “celebration”, but this is not necessarily going to be a universal experience. When it comes to workplace relations, Level Two is just as likely to ... More>>

ALSO:


Telecoms: Spark Welcomes Spectrum Allocation And Prepares For 5G Rollout Over The Next 12 Months

Spark welcomes spectrum allocation and prepares for 5G rollout over the next 12 months Spark today welcomed the announcement of the direct allocation process of 5G spectrum, with the Company to be offered management rights to 60 MHz of 3.5 GHz ... More>>

ALSO:


Trade: Record Monthly Surplus As Imports Dive

Imports in April 2020 had their biggest fall since October 2009, resulting in a monthly trade surplus of $1.3 billion, Stats NZ said today. “This is the largest monthly trade surplus on record and the annual goods trade deficit is the lowest ... More>>

ALSO:


Media Blues: Stuff Chief Executive Buys Company For $1

Stuff chief executive Sinead Boucher has purchased Stuff from its Australian owners Nine Entertainment for $1.
The chief executive was returning the company to New Zealand ownership, with the sale is expected to be completed by 31 May.
"Our plan is to transition the ownership of Stuff to give staff a direct stake in the business as shareholders," Boucher said in a statement.... More>>

ALSO:

RNZ: Bar Reopening Night 'much, Much Quieter'

Pubs and bars are reporting a sluggish first day back after the lockdown, with the fear of going out, or perhaps the joy of staying home, thought to be a reason for the low numbers. More>>

ALSO:

Stats NZ: New Zealand’s Population Passes 5 Million

New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today. More>>

NIWA: Seven Weeks Of Clearing The Air Provides Huge Benefits: Scientist

Seven weeks of lockdown has provided evidence of how pollution can vanish overnight with benefits for the environment and individuals, says NIWA air quality scientist Dr Ian Longley. Dr Longley has been monitoring air quality in Auckland, Wellington ... More>>

ALSO:

Government: Milestone In Cash Flow Support To SMEs

A significant package of tax reforms will be pushed through all stages in Parliament today to throw a cash flow lifeline to small businesses. More>>

ALSO:



University Of Canterbury: Astronomers Discover The Science Behind Star Bursts That Light Up The Sky

University of Canterbury (UC) astronomers are part of an international team that has revealed how explosions on the surface of a white dwarf star can increase its brightness by thousands or millions of times making it look like a new star. For ... More>>

Air NZ: Air New Zealand Adds Business-timed Flights For Regions

Air New Zealand will operate business-timed flights in and out of a number of regional ports from next month.
The flights will allow customers in Hamilton, Tauranga, Napier, New Plymouth, Palmerston North, Nelson, Dunedin and Invercargill to undertake a day of business in either Auckland, Wellington or Christchurch... More>>

ALSO: