Love Springs Limited and its director Phillip Smart have been fined a total of $555,000 in the Auckland District Court late yesterday afternoon for breaches of the Fair Trading Act in relation to the door to door sales of water filters.
Love Springs Limited and its director Phillip Smart have been fined a total of $555,000 in the Auckland District Court late yesterday afternoon for breaches of the Fair Trading Act in relation to the door to door sales of water filters.
The water filters were sold in 2009-2010 by sales staff who claimed that local drinking water could cause cancer, birth defects and miscarriages and was dangerous to people’s health. Love Springs, aided and encouraged by Mr Smart, trained door-to-door sales staff to sell the filters using deliberate marketing tactics that took advantage of people’s fears about their health. Love Springs targeted towns and cities throughout the North Island.
Mr Smart had previously been convicted of similar offending in Australia.
Judge Russell Collins found that Mr Smart was “the architect” of the approach of using “scare tactics around the fitness of New Zealand tap water.” He stated that Love Springs’ marketing claims were utterly false.
Judge Collins imposed fines of $355,000 for Love Springs and $200,000 for Mr Smart.
“This was nasty and cynical offending which deserved the significant penalties imposed,” said Commerce Commission Head of Investigations Ritchie Hutton.
“The Commission obtained an injunction to stop the conduct in April 2010, and we are pleased that the Court has now recognised the seriousness and exploitation of the offending by imposing these penalties”.
More than 6,000 water filters, at $1,600 each, were sold during the period covered by the charges.
“This offending caused significant harm to the public” said Mr Hutton. “The company targeted vulnerable people in their homes by scaring them with false information about the safety of New Zealand’s reticulated water network, and then charging them $1,600 for something that comes out of the tap. Scientific evidence shows that the dire health warnings were completely false.”
While Love Springs pleaded guilty to the charges in June 2012 its sentencing was delayed as Mr Smart defended the charges brought against him. He was convicted on all charges on 4 October 2013.
Background
In April 2010 the Commission obtained an interim injunction against three companies involved in selling Love Springs water filters from engaging in conduct which was alleged to breach the Fair Trading Act.
