Commerce Commission action against misleading cellphone promotions continued today with the Christchurch District Court fining Ben Rumble Communications Limited and Bennie Arthur Rumble a total of $8,000 for breaching the Fair Trading Act.
Commission Chairman Dr Alan Bollard said that the prosecutions related to television advertising screened between October 1995 and April this year. The prices advertised were lower than the real selling prices because extra costs that customers had to pay were not clearly disclosed.
"All advertising must be complete, clear and accurate," Dr Bollard said. "Making misleading claims about prices or leaving out important conditions can lead to breaches of the Fair Trading Act."
Cellphone promotions are of particular concern to the Commission.
"Our monitoring of advertising suggests there is a big problem with cellphone promotions. Extra costs, like connection fees, and special conditions are often left out or glossed over. If this does not change, then more court action will be taken by the Commission."
Dr Bollard said that in this case the Court has given its own warning that fines for other breaches can be much higher.
The Court described the fines it imposed on the company and Mr Rumble as at the lower end of the scale because the breaches were caused by "carelessness" and were "not overt", and they centred on "not disclosing well" rather than not disclosing information at all.
Dr Bollard said that as well as the fine, the company and Mr Rumble will also have had the costs of lawyers fees, management time and bad publicity to contend with.
"All businesses should be aware that the total cost of not complying with the law is usually much more than solely the fine imposed by the court."
The Commission laid nine charges against each of Ben Rumble Communications and Mr Rumble.
In August this year the Court found the company and Mr Rumble guilty of two charges each and not guilty on the remaining charges. Dr Bollard said that the Commission has appealed the not guilty verdicts. The High Court has not yet set a hearing date.
Three other cellphone retailers have previously been prosecuted by the Commission. They are Cellular Systems Ltd, Cellphone Warehouse Ltd, and Pacific Telephones Ltd which trades as Cellular One. A fourth company, Hart Candy Communications Ltd, has given the Commission signed undertakings admitting that it breached the Fair Trading Act and agreeing to amend all its advertising and promotional material to ensure that all conditions and costs are clearly shown.
Media contact: Communications officer Vincent Cholewa
