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Letters from March 2016


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Faulty shoes

Last month, I purchased some shoes. I have only worn them as dress shoes and no more than six times. The side has split on one shoe. I have spoken with the retailer and it is only prepared to patch them. I said I would like a refund or replacement but the store isn’t prepared to do this. I would like your advice please. LESLY HUNT

If the fault can’t be repaired or is substantial, the Consumer Guarantees Act gives you the right to reject the shoes and choose a replacement pair or a refund. However, if the defect is minor, the Act lets the retailer choose whether to offer a repair, a replacement or a refund. But if the repair isn’t satisfactory, you are entitled to reject the shoes.

Price change

In December last year, I purchased six outdoor chairs at a quoted price of $115 per chair. Today, while organising for the chairs to be delivered, we have been told the person who quoted and sold us the chairs made a mistake and the price should have been $385 each. Had we been given the higher price, we would have made a different decision. What is our legal position in this situation? JOHN BIRCH

Once you paid for the chairs, you had a contract and the shop can’t change the price. This is contract law and you should point this out to the retailer. In certain circumstances, the Contractual Mistakes Act (now the Contract and Commercial Law Act) allows the courts to cancel a contract where a mistake has been made. But the retailer is likely to have difficulty relying on the Act to pursue a claim in this case.

If the chairs had been displayed with an incorrect price and the error was picked up by staff before you paid, the situation would be different: the shop wouldn’t have to sell the chairs at the displayed price.

UPDATE: The contract was honoured by the retailer and John is now enjoying his outdoor chairs.

Taxing issue

Is it OK/legal to charge GST on a credit card fee? The company concerned is charging 2.5 percent for the use of a credit card and then adding GST to make it 2.875 percent in total. As a financial service, should this be exempt?

Under the Goods and Services Tax Act, GST applies to all goods and services unless there are valid reasons for departing from this rule. The credit card service fee has not been deemed exempt from GST. Until 2009, a “no surcharge rule” agreed between credit card companies and banks prevented retailers from passing on fees they were charged for card transactions. But after the Commerce Commission brought proceedings alleging anti-competitive arrangements, the rule was withdrawn. Since then, surcharges have entered the picture. GST is usually included within the surcharge. Sometimes it’s added separately. The surcharge, and therefore its GST component, varies between retailers. For example, IRD’s surcharge is 1.42 percent and Ticketek’s starts from 2.55 percent. Air New Zealand charges a fixed rate surcharge of $4 per person for a one-way domestic flight.

Travel protection

I’m trying to buy travel insurance for my child (aged 14) to attend an event in the US. The event is being organised through a Kiwi tour company, not a travel agent. But every policy I’ve read excludes cover if the tour company becomes insolvent. In my scenario, this is a risk I want covered. What are my options? ANA CONNOR

Luke Harrison, Consumer senior research writer, says: Travel insurance policies cover non-refundable travel and accommodation deposits if your trip is cancelled for reasons beyond your control (such as serious illness). But as you say, insurers typically exclude cover for losses if your tour operator goes bust. Your best defence is some due diligence before you book. Check the tour company is a bonded member with the Travel Agents’ Association of New Zealand. The association will pay up to $250,000 to cover all claims if a member company fails and customers don’t receive pre-purchased tickets or services. Booking by credit or debit card may also give you chargeback rights if the tour company goes bust. A chargeback is where the bank agrees to reverse your payment. See our “Travel and holidays” page for more information on travel agents and travel insurance.

Are budget brands inferior?

Is there anything inferior about Budget baked beans, compared with Wattie’s? And what about Budget milk? Milk is milk surely? ROBIN

Belinda Castles, Consumer senior writer, says: You’re right – “milk is milk”. If you compare the ingredients list of standard blue top milk, you’ll see only one ingredient – “milk”. The nutrition information panel of different types of milk, such as yellow top or green top milk, will be almost identical among different brands.

It’s more complicated for baked beans because the percentage of ingredients may be different. You can check by reading the ingredients list. The percentage of characterising ingredients must be stated there. For example, Wattie’s Baked Beans has 51 percent navy beans, compared with Budget Baked Beans, which has 44 percent. You can also compare nutrition information panels to check levels of saturated fat, sugars and sodium.

Lawnmower warranty

I am considering buying a $500 Ryobi lawnmower. Ryobi states its warranty covers the engine for two years. I would think most people would reasonably consider five years as reasonable for a $500 lawnmower. Is it likely I would get some protection under the CGA if the engine or a core component failed after three years? ANDRE SOUTHGATE

George Block, Consumer technical writer, says: I agree that you should reasonably expect a petrol lawnmower to last longer than two years. As long as it’s well-maintained, you should be able to get at least 10 years out of a petrol mower. Unfortunately, retailers and manufacturers often hide behind the warranty at first, even if a core component fails. In our view, if a failure was to occur after five years and you had stored your mower inside, changed the oil every year and sharpened or replaced the blades when they became dull, then you would have a strong claim under the Consumer Guarantees Act. In that case, I would expect a retailer to repair or replace the mower, or give you a refund. Should it refuse to do so, then you could take your case to the Disputes Tribunal. You should also hold on to any documents relating to the mower’s purchase and maintenance.

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