A man who promoted 'free' flights deals to businesses has been fined $6,000 on a representative charge of breaching the Fair Trading Act.
As managing director of Fly Away NZ Ltd, Warren Croad sold the promotional packages to up to 50 New Zealand businesses, mostly car yards, which used them to attract customers. At least 1,534 people received the vouchers.
Customers were told they would get free flights to the Gold Coast if they purchased from the business. The Court found that the promotion was misleading because anyone wanting to use the 'free' flight had to pay for inflated accommodation on the Gold Coast to qualify. The extra charge for the accommodation meant customers were, in effect, paying for the flight.
"The cost of taking up the deal would have been more than the cost of booking a holiday without the voucher," says Commerce Commission Director of Fair Trading Deborah Battell.
Ms Battell says that businesses must ensure that 'free' offers were truly free.
"Free means free - the Fair Trading Act does not allow the cost of one part of a deal to be inflated to cover a so-called 'free' offer."
Promotions with 'free' flights, particularly to the Gold Coast, had been around in New Zealand for a while, and had been targeted by the Commission and featured on Fair Go, says Ms Battell.
"Free flight deals usually fall into the 'too good to be true' category," says Ms Battell.
"Customers should be extremely wary of promotions offering 'free' flights, as they may well end up paying more for their holiday than the market rate."
In August 2006, Tower Motor Group, which had offered the promotion, was also found guilty of breaching the Fair Trading Act.
"Retailers need to understand that they are legally liable for any promotions they offer to customers," says Ms Battell.
"To protect themselves from prosecution, companies must ensure that any promotions they offer are genuine and that consumers are getting what they are promised."
Background
The deal.
The retailers who participated in this scheme purchased "free tickets to the Gold Coast" from the New Zealand promoter for up to $89 per two-person package. They then advertised to the public that these "free tickets" would be given away to them if they purchased specified goods or services. Most businesses offering the promotion were car yards, but it was also offered by bars, and by furniture and bed retailers.
The Australian supplier.
The flight and accommodation vouchers were sold to Fly Away NZ by an Australian company, Holiday Resorts International. The Commission did not take action against Holiday Resorts International in this instance.
