Paramount Merchandise Company Limited (Paramount) was fined $104,000 after pleading guilty in the Manukau District Court to five charges under the Fair Trading Act, including three charges that it supplied hot water bottles in 2019 that were banned from sale in New Zealand because they did not comply with an applicable safety standard, and two charges of making false and/or misleading representations that two types of the hot water bottles supplied complied with the standard when they did not. 

Paramount imports and wholesales general merchandise to a range of retailers including several major retailers and supermarkets. Paramount has recalled the non-compliant hot water bottles from sale.

In sentencing Paramount, Judge R J Earwaker said, “Despite clearly labelling the products, with labels it has created, as complying with the standard, the products did not so comply.” The Judge accepted the Commission’s submission that had Paramount carried out brief visual inspection of the hot water bottles, the multiple compliance failures would have been evident, and noted that “Paramount is a sufficiently large enough business to have a robust compliance scheme”.

Commission Chair Anna Rawlings said, “Product safety requirements help protect consumers against the risk of physical harm that can occur if they are supplied with non-compliant products – in this case the risk of burns caused by the misuse or failure of hot water bottles. Importers, wholesalers and retailers all need to research and familiarise themselves with their legal obligations and ensure that they have systems in place to check that their products comply before they offer them for sale.”

In August this year, ND Import & Export Limited (ND Import & Export) was fined $36,000 after pleading guilty to three charges for supplying toys that did not comply with the mandatory product safety standard for children’s toys, and another three charges for supplying hot water bottles that were banned from sale in New Zealand.

ND Import & Export sources products from local wholesalers and also imports products. Its retail stores in Hamilton, Wellington and Te Awamutu trade under the name GO!NZ. The hot water bottles it was selling were supplied by Paramount. A toy drum set sold by ND Import & Export was sold despite being the subject of a product safety recall notice sent to it five months prior by another New Zealand-based importer. 

ND Import & Export has withdrawn all of the products subject to the charges from sale.

In sentencing at the Hamilton District Court, Judge P G Mabey QC also drew attention to ND’s lack of robust compliance processes. “ND is of moderate size but nonetheless was well equipped to implement an inhouse robust compliance regime but did not do so.”

Ms Rawlings said, “The case against ND Import & Export highlights not only the importance of compliance with safety standards, but the additional need for retailers to ensure that when notified of a product safety recall, they check their stock and remove any products subject to the recall from sale.” 

The judgements related to Paramount and ND Import & Export can be found on our case register.

Background

Product safety standards
The Commission enforces mandatory safety standards for six products, including children’s toys, and unsafe goods notices for eight products, including hot water bottles.

The Unsafe Goods (Hot Water Bottles) Permanent Prohibition Notice 2016 was issued pursuant to s 31 of the FTA. Under the Notice, rubber and polyvinyl chloride (PVC) hot water bottles are declared to be unsafe if they do not meet the BS1970:2012 Hot Water Bottles manufactured from rubber and PVC – specification (the British Standard) (as amended by Schedule 1 of the Notice).

Children’s toys are subject to the applicable New Zealand Standard, namely the Australian/New Zealand Standard entitled AS/NZS ISO 8124.1: 2002 (the Standard) to the extent incorporated by the Product Safety Standards (Children’s Toys) Regulations 2005 (the Regulations).

The Standard aims to reduce the risk of injury or death to young children by ensuring that toys intended for their use are not so small, or do not have parts so small, that they could be inhaled or ingested causing choking.

Toys must be able to withstand testing which includes dropping, tension, torque (or twisting), and for small parts which might come off during normal use or foreseeable abuse.

Compliance with the Standard is mandatory under the Regulations. Pursuant to s 30(1) of the Fair Trading Act 1986 (FTA), if a mandatory product safety standard applies, a person must not supply goods unless that person complies with that product safety standard.

Non-compliant hot water bottles pose the risk of burns and serious injury to users. To meet the British Standard, hot water bottles must be manufactured to certain safety and performance specifications and be marked with particular safety information. Plastic bag packaging must warn of the risk of suffocation. 

Hot water bottles are declared unsafe and prohibited from sale if they do not comply with these requirements. 

Case history/detail: Paramount
The Commerce Commission investigated Paramount in August 2019 after its investigation into ND Import & Export. The hot water bottles supplied by Paramount did not meet several requirements of the Unsafe Goods Notice. The 1 litre PVC hot water bottles did not have the required permanent markings which enable the hot water bottles to be traced to the manufacturer and the written user instructions, including safe use instructions, required to be provided with the bottles were incomplete. The plastic bag packaging did not have the necessary suffocation risk warning. 

The 500ml PVC hot water bottles were supplied without the required permanent markings, the plastic packaging suffocation risk warning, and with incomplete written user instructions. 

The 2 litre rubber hot water bottles were also supplied with incomplete written user instructions and one of the rubber hot water bottles sent by the Commission for testing under the Standard failed pressure testing, which could result in leakage. 

The cardboard packaging for the 1 litre and 500ml PVC hot water bottles represented that the two types of bottles complied with the British Standard when they did not. 

Paramount fully cooperated with the Commission during the investigation and recalled the three types of hot water bottle from sale.

Case history/detail: ND Import & Export
The Commerce Commission investigated ND Import & Export in 2018 for the supply of unsafe hot water bottles and baby nightwear, which resulted in compliance advice being given that it was at risk of breaching the FTA. 

The charges in this prosecution related to three different product lines – a colourful stacking toy, a pink toy guitar and a “Frozen” themed toy drum set – and two types of hot water bottles – 500ml and 1L PVC hot water bottles – which were sold  while they did not comply with safety standards. The toys were sold between August 2017 and August 2019. The hot water bottles were sold between August 2019 and June 2020.

When tested, each of the toy products – a colourful stacking toy, a pink toy guitar and a “Frozen” toy drum set – failed to comply with the relevant safety standard, because removable components or parts of the toys liberated during testing were small enough to fit in the small parts cylinder and therefore could become lodged in a child’s throat, and the batteries in the guitar toy became accessible, creating a further risk of children choking on or swallowing accessible batteries.

Photos of the hot water bottles and toys are available on request.

Recent relevant cases
Kmart agrees to improve toy safety procedures following Commission investigation.
More toy safety fines and prosecutions
Ink Power Limited was warned for supplying a hot water bottle that failed to comply with an Unsafe Goods Notice
Warning letter to Cinevan International Limited for supplying a hot water bottle that failed to comply with an Unsafe Goods Notice.