Chrysler importer, Astre (NZ) Pty Limited was fined $10,000 in the Auckland District Court yesterday, after admitting it made misleading claims about the prices of Jeeps.
The Commerce Commission prosecuted Astre, alleging two breaches of the Fair Trading Act. Astre pleaded guilty.
Commission Chairman Dr Alan Bollard said that both charges related to extra costs that were not disclosed in advertisements.
In April and May this year, Astre ran a "first anniversary sale" promotion in newspapers and on television. It offered a Jeep Cherokee for "no deposit, $799* per month, plus GST". The asterisk referred to small print that stated "based on retail price of Jeep Cherokee Sport at $55,800.00 special conditions and normal lending criteria apply".
What the advertisements did not say was that the last payment was $22,000, not $799 plus GST.
"This was an undisclosed cost that the Commission saw as misleading," Dr Bollard said. "Astre has agreed that its advertising was misleading, and has admitted in court that it breached the Fair Trading Act."
At the beginning of this year, between January and March, Astre ran a television and newspaper campaign offering Jeep Cherokee Dakota's at "only $49,800.00". However, the real cost to the customer was higher because, in that case, extra up-front costs were not disclosed.
Before a customer could buy a Jeep they would have to pay what were described as on-road costs, including registration, which were additional to the $49,800.
"These were not optional extras, they were compulsory extra payments that all customers had to make. They were part of the real cost of the Jeep, but were not disclosed." Dr Bollard said.
One Jeep was sold during the earlier promotion and 23 were sold during the anniversary sale.
"Yet another company has been prosecuted and fined for not disclosing extra costs to customers," Dr Bollard said. "Misleading claims about prices are disturbingly common, and the Commission will continue to take action against them as necessary.
"Price is usually a big factor in customers' minds, and misleading claims about prices can have a big impact on buying decisions.
"Misleading claims hurt customers who are taken in and competitors who miss out on making sales.
"These are not hard issues for advertisers to understand. The issues are what are all the costs that customers may face, what conditions are attached, and are they described accurately and completely."
Media contact: Fair Trading Manager Rachel Leamy
Phone work (04) 498 0908
Communications Officer Vincent Cholewa
Phone work (04) 498 0920
Commission media releases can be viewed on its web site www.comcom.govt.nz
