Imported rugs sold to tourists as Made in New Zealand.
Four companies and four directors fined for making false claims about alpaca and merino wool products have had their appeal rejected by the High Court.
The companies and directors pleaded guilty and were fined a total of $601,900 in September 2013 for breaches of the Fair Trading Act.
The companies took tour groups from China, Korea and Taiwan to several premises, where they were told alpaca rugs that were imported from Peru were made in New Zealand. Two of the companies also made false claims that duvets were 100 percent alpaca or merino wool.
In the High Court, the defendants claimed they did not realise the mislabelling was false or misleading because they were naïve and because English was not their first language. But these claims were dismissed by the judge.
Commerce Commission chairman Dr Mark Berry said the Commission was pleased the sentences had been confirmed on appeal.
“It is important that New Zealanders and visitors to New Zealand can trust that what they are being told is true. Labelling and representing products in this manner not only misleads buyers but also has the potential to discredit the New Zealand tourism industry," Dr Berry said.
The four companies and four individuals that had the appeals against their sentences under the Fair Trading Act dismissed are:
Hyeon Company Limited $105,000
Duvet 2000 Limited $200,000
Mr Han Young Chae (director of Hyeon and Duvet 2000) $ 24,500
JM Wool Limited $182,000
Mr Jong Myung Lee (director of JM Wool Limited) $ 21,000
Premium Alpaca New Zealand Limited $ 56,000
Mr Yun Duk Jung (director of Premium Alpaca New Zealand Limited) $ 6,700
Mr Bo Sun Yoo (director of Premium Alpaca New Zealand Limited) $ 6,700
UPDATE (28 October 2014): BGV International Ltd has been fined $22,000 in the Auckland District Court for also misleading Asian tour groups about the country of origin of expensive alpaca rugs.
BGV International Limited was convicted for 10 breaches of the Fair Trading Act. It sold alpaca rugs imported from Peru, that had been re-labelled New Zealand made, in Auckland and Rotorua. The alpaca rugs sold for between $2000 and $4000 per rug, when Peruvian alpaca rugs sold for between $1000 and $1600 each in Rotorua retail outlets.
BGV also exported a significant quantity of the falsely labelled alpaca rugs to its parent company in Australia. The directors of BGV International are based in Australia.
UPDATE (12 December 2014): Auckland souvenir company Wild Nature NZ Limited and its director Mr Sung Ho (Stanley) Park have been fined $243,444 and $25,000 respectively in the Auckland District Court after pleading guilty to over 30 charges of making false representations about expensive alpaca and merino wool products for sale to tour groups.
Wild Nature faced 37 charges in total – the most of all the companies prosecuted. Mr Park was sentenced on 30 charges relating to the company’s behaviour.