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Solar panel retailer warned over financial benefit claims

2 November 2017

The Commerce Commission has issued a warning to a solar panel systems retailer over claims made about the financial benefits of solar panel installation.

In the Commission’s view, New Zealand Home Services Limited (NZHS) is likely to have breached the Fair Trading Act (FTA) by making unsubstantiated representations. 

“It is important for traders to properly substantiate claims which cannot easily be verified by the consumer. Solar panel installation requires significant up-front cost and in our view NZHS made claims about the financial benefits of installing solar systems without sufficiently backing up those claims in the New Zealand market,” said Ritchie Hutton, the Commission’s Head of Investigations.

NZHS made the representations on the www.nzhomeservices.co.nz website and on flip charts used during sales presentations. The claims included:

  • “installing a solar system increases the average property value by 3 to 4% and houses that have a solar system installed usually sell twice as fast as other properties on the market”
  • “in many ways, your solar power system is a financial product – one that is capable of generating annual returns ranging anywhere from 10% to more than 30%”
  • “the cost of power is always increasing – in this case, between 2.5 to 7% each year”
  • “over the past 20 years, electricity prices have risen between 2.5% and 7% every year”.

The Commission asked NZHS to provide materials to substantiate those claims.

“In our view the materials provided were of varying degrees of reliability, were from overseas sources not relevant to the representations made about the New Zealand market, or were created or compiled after the representations were made,” said Mr Hutton.

The substantiation provision of the FTA requires a trader to have reasonable grounds for making a representation at the time it was made.

“NZHS describes itself as an Australasian company, and overseas companies operating in New Zealand must ensure representations made in this country are appropriately substantiated,” he said.

NZHS has removed the representations from its website and sales presentations.

Background

The unsubstantiated representations provision of the FTA came into effect in June 2014.

It states that a representation is unsubstantiated if the person making it does not have reasonable grounds for it, at the time it is made.

In November 2014 the Commission issued a warning to Baa Baa Beads for health claims, and in September this year heat pump supplier Fujitsu became the first trader convicted under the provision, for claims about energy efficiency.