Cellphone company admits Fair Trading breach: Commission says industry must clean up its act
Published08 Oct 1997
Hart Candy Communications Ltd has admitted that its advertising of cellphones breached the Fair Trading Act.
The Commerce Commission has accepted a settlement from Hart Candy Communications, which includes the company giving signed undertakings stating:
"Hart Candy Communications acknowledges that it has contravened the Fair Trading Act 1986 by using fine print to disclose additional costs and conditions in its advertising of cellphones.
"Hart Candy Communications Ltd will amend all its advertising and promotional material to ensure that all conditions and costs are clearly shown."
Commission Chairman Dr Alan Bollard said that cellphone promotions are a particular problem that the Commission has identified through its surveillance of advertising.
"Extra costs and conditions are often left out or not clearly disclosed," Dr Bollard said.
"In other cases, courts have made it clear that it is the overall impression created by advertising and other promotions that counts. Small print that contradicts the message in bold type, or that substantially changes it, may not be enough to prevent the advertising being misleading and breaching the Fair Trading Act.
"Courts have stated, 'small print cannot save a representation from being misleading'," Dr Bollard said.
He advised people considering buying cellphones to watch out for connection fees, monthly rentals, activity fees, disconnection fees and other contract details that affect the price they must pay and the conditions of use.
In this case, conditions were stated in very small print (a size known as six point). When interviewed by a Commission investigator, Hart Candy's Managing Director said about the small print: "I must admit it's getting pretty small".
"While the company deserves some credit for co-operating with the Commission and changing its advertising without court action having to be taken, it would have been better if the problem had not occurred at all," Dr Bollard said.
"This is an industry that continues to breach the Fair Trading Act. It needs to clean up its act urgently. We will continue to closely monitor cellphone promotions and if necessary will consider taking more enforcement action in the courts."
The Commission has previously prosecuted four companies over misleading cellphone promotions. Three, Cellular Systems Ltd, Cellphone Warehouse Ltd and Pacific Telephones Ltd trading as Cellular One have been, convicted and fined. Court action against the fourth company, Ben Rumble Communications Ltd, is continuing.
Media contact: Fair Trading Manager Rachel Leamy
Phone work (04) 498 0908, home (04) 479 6334, cellphone 021 662 773
