Low advertised prices

Sundowners Overland knew in April when it quoted a price for the tour to the House of Travel that it would be charging a substantial currency surcharge. But it didn’t include the surcharge in any published or advertised “headline” price in NZ dollars distributed through its agents here or on its website.

Using artificially low headline prices in advertising to gain business from competitors is an unfair trading practice that’s outlawed here and in Australia.

Our Fair Trading Act is administered by the Commerce Commission. The commission considers it “best practice for the full price that a consumer has to pay to be clearly specified ... Any fine print disclosure of additional costs to be paid, or disclosing the true costs of the purchase when a customer is about to make the purchase is unlikely to prevent a breach of the Act”.

In our view Sundowners Overland’s advertising of its trans-Mongolian cultural tour up till late June is a possible breach of the Act. 

Who is accountable?

If the only way Kiwis could buy the tour was from the Sundowners Overland website, they wouldn’t be covered by our trading laws. But Sundowners Overland has contracts with local travel agents that are paid a commission to sell the tours and rely on the company’s brochures and advertising.

When we raised the issue of accountability for misleading advertising with Mark Sullivan from the House of Travel’s head office, he denied that its agents had any accountability. He said their role was strictly that of an agent and that the tour contract was between the tour operator (the “principal”) and the customer.

TAANZ code of ethics and practice

However, the House of Travel is a member of TAANZ. That means it is bound by the TAANZ code of ethics and practice. The Code imposes a duty on members to protect their customers from misrepresentation. It stipulates that “Members shall not ... when promoting the services of their principals make … false, misleading, deceptive or dishonest statements. This prohibition shall apply equally to direct communications ... indirect communications ... and to their advertising”.

The Code also requires members to “protect their customers and the public ... against ... misrepresentation and unethical practices … within the industry as a whole”.

The House of Travel and TAANZ maintain these provisions don’t apply to material provided by tour operators that TAANZ members distribute. If that’s the case, we think they should apply.

In our view, travel agents have a clear responsibility of care to their customers. That responsibility includes insisting that tour operators they represent have fair and clear pricing and advertising. Matthew really enjoyed his Silk Road experience, the only sour note was the excessive currency charge.