Not honouring a settlement with the Commerce Commission has led to furniture retailer Redpath International Limited being fined $5,000 for breaching the Fair Trading Act.

Commission Chair John Belgrave said that this conviction should be seen as a warning: "the Commission follows up all its settlements, and if they are not honoured will look at further action".

Redpath International promoted "interest free" terms. However, the brochure did not state that 20.9 percent interest would be charged if goods were not paid off in full by January 2000.

In the Auckland District Court, Judge McMeeken said that in setting the fine she took into account that Redpath is a family business and the director whose actions led to the prosecution no longer works at the company.

Redpath distributed brochures through the New Zealand Herald and suburban newspapers. They offered in bold print "interest free deals of the century no repaymentsn'til January 2000".

When interviewed by Commission staff, the company's Managing Director acknowledged that he was responsible for approving the advertising.

He also acknowledged that he had previously signed a settlement with the Commission over a promotion offering "interest free no repayments until January 1999". The previous promotion also did not disclose that interest would be charged on goods not fully paid off by January.

"The courts have ruled many times that 'interest free' must mean the same as the cash price," Mr Belgrave said. "They have also ruled many times that all significant conditions in this case a time limit must be clearly and accurately disclosed.

"It is disappointing that another retailer has been convicted over false or misleading claims about so called 'interest free' deals.

"False or misleading 'interest free' promotions were a problem in the past until the Commission took a series of prosecutions. If the problem appears to be coming back, then we will have to consider more enforcement action against it."

Media contact: Chief Investigator, Wellington Ross McPherson, Phone work (04) 498 0909, cellphone 021 129 5971

Senior Advisor Communications Vincent Cholewa, Phone work (04) 498 0920