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$75,000 Fine For Heat Pump Servicing Company

Heat pump servicing company Ocean Contracting Limited has been fined $75,000 for making false or misleading representations to 10 customers in Otago and Southland, following a Commerce Commission investigation.

The company earlier pleaded guilty to 10 charges under the Fair Trading Act 1986.

Ocean Contracting approached customers and offered to service their heat pumps. During that service inspection it advised that their heat pumps were leaking refrigerant gas, that it would cost between $180 and $400 to “top up” the refrigerant gas, and that the heat pump would stop functioning correctly if a “top up” was not performed. Some customers were shown a gauge purporting to record low gas pressure.

In fact, none of the complainants’ heat pumps required a refrigerant top-up. Many of the complainants’ heat pumps were fully functional. Where heat pumps had problems, they were not leaking refrigerant gas. During the Commission’s investigation an Ocean Contracting technician admitted falsely diagnosing refrigerant leaks.

In sentencing notes Judge Neave in the Christchurch District Court said “this was a situation that was created by the company’s flawed policies and for which the company must accept responsibility.”

For the Commission, Chair Anna Rawlings said “any business which cold calls or door knocks for customers should note that Ocean Contracting was held liable for the representations made by its employee because its technician made the false or misleading representations within the scope of his employment and as a representative of the company. Staff should be properly trained and systems should be in place to ensure that they do not mislead customers about the need for any services or about the kind of services actually delivered.”

All ten complainants are from Otago or Southland and received cold calls by telephone from Ocean Contracting in 2016 or 2017, later followed by a visit to service their heat pumps. Most complainants were retired.

Judge Neave said that “a number of the complainants are financially vulnerable. Paying for the top-up procedure was a significant expense for them.”

Ms Rawlings said “the victims in this offending had no way of knowing whether or not the claims made about servicing their heat pumps were accurate. They relied on the expertise of Ocean Contracting and they were misled into paying Ocean Contracting for services they did not need. Several complainants later incurred more unnecessary costs because they hired another company to check the claims made by Ocean Contracting.”

Ocean Contracting has agreed to pay reparation to the victims identified in the charging documents for the expenses they incurred as a result of the conduct.

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