Noel Leeming, Sky TV, Telecom, Vodafone and The Warehouse. They’re big-name corporates and all feature in the Commerce Commission’s list of companies it’s taken repeated enforcement action against in the past 3 years. Details of investigations released to Consumer show the line-up also includes the Briscoe Group, Harvey Norman, Nova Gas, Number One Shoes, Progressive Enterprises, Pulse Utilities and Slingshot.
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The Fair Trading Act makes it an offence for companies to make misleading claims about their goods and services. But complaints investigated by the Commerce Commission show many companies continue to push the boundaries of the law.
Misleading prices are a common cause of complaint, which suggests some traders stand to make significant financial gains from flouting the law.
Only the courts can decide whether a company’s actions have breached the Act and only the courts can impose financial penalties. But taking a company to court can be costly and not every case is pursued.
The commission’s most commonly used enforcement tools are warning and compliance-advice letters, which don’t come with any financial sanction (see 'Complaints investigated', below). Information released to Consumer shows some companies get these letters regularly.
Telcos continue to stand out for questionable behaviour.
Since 2010, Telecom has received 5 compliance-advice letters about its broadband and mobile phone services. These letters come on top of a settlement it reached with the commission in 2011 after admitting it had overcharged customers more than $2.7 million for broadband use.
During the same period, Vodafone has had 2 compliance-advice letters and a warning. In 2012, it was stung with fines close to $1 million for misleading promotions run at various times between 2006 and 2009.
In 2013, the company agreed to pay out nearly $270,000 to customers in a settlement with the commission over a promotion involving its “Broadband Lite” service.
Slingshot recently copped a $250,000 fine after pleading guilty to “slamming”, a practice where customers are switched to another service provider without their consent.
Over 100 complaints were made to the Commerce Commission between 2009 and 2011 alleging telemarketers acting on Slingshot’s behalf had either misled customers about the company’s services or had moved them to Slingshot without their consent.
Slingshot had already been warned by the commission in 2009 for similar practices. The company finally appeared in court last year following a commission investigation that found Slingshot had aggressively chased the “slammed” customers for payment, referring some to debt collection agencies.
Chief executive Mark Callander says its contract with the telemarketing company involved has since been terminated.
Electricity companies, big-box retailers and online traders also feature in the ranks of companies which have had warnings or compliance-advice letters.
In many cases where a warning or compliance-advice letter is issued, a fine may have been more effective in encouraging compliance.
Recent law changes have finally given the commission the power to issue infringement notice fines but only for a very narrow range of offences. The commission can’t issue these notices for misleading claims.
In contrast, the Australian Competition and Consumer Commission is able to issue infringement notices for most fair trading offences. In recent months, it’s fined a trader AUD20,000 for misleading “free-range” poultry claims and a power company AUD26,000 for deceptive pricing and other claims.
But officials here advised against adopting the Australian approach and recommended the commission be given only limited infringement notice powers. This advice was followed during the recent consumer law reform process and an opportunity to get better outcomes for consumers was missed.
Just 56 percent of businesses surveyed by the commission in 2013 stated they had an active Fair Trading Act compliance programme. While that figure’s up from 41 percent in 2012, it suggests a significant number of companies still don’t take their FTA responsibilities all that seriously.
The Commerce Commission’s figures show 18 percent of Fair Trading Act investigations over the last 3 years involved companies that had already been investigated for alleged breaches of the Act.
We’ve listed below 22 well-known companies investigated on 3 or more occasions during the period. The companies received compliance advice, warnings or agreed to settlements (see "What they mean", below) about pricing or product claims.
Callplus Services (trading as Slingshot)
Jump On It (trading as Living Social)
Michael Hill Jewellers
New Zealand Vacuum Cleaner Company (trading as Godfreys)
Noel Leeming Group
Nova Gas (now Nova Energy)
Number One Shoes
Report by Jessica Wilson.
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