Commerce Commission staff will be visiting shops and speaking at meetings in Hamilton and Cambridge this week.

Commission Fair Trading Manager Keith Manch said Commission staff will be talking about the Fair Trading Act. The visits are part of a programme to raise the profile of the Commission and knowledge of the Act in areas where there are no Commission offices.

Commission investigators will be talking to shop owners and managers to gauge their knowledge of the law and help them in any areas where they are not sure of their rights and obligations.

"It is an education exercise," he said. "We want people to understand how to operate within the law to protect themselves and their customers."

One issue Commission staff will be focusing on is free offers.

Less than two months ago the Court of Appeal gave a ruling that defined when so called "free" offers are misleading. The decision confirmed the Commission's view that the common sense approach that free means no extra cost, is correct.

The Court said if customers could pay a cheaper price when they did not want the free item, then the item was not free and the promotion was misleading.

It also said that goods which must be bought to get the free item must be sold at their usual price. If the price is increased during the promotion, then the item was not free and the promotion was misleading.

Last week, in the first case of its kind, the Auckland District Court found retailer Mt Albert TV guilty of breaching the Fair Trading Act in relation to an interest free offer on video players.

A customer who wanted to take up the offer would have had to pay $304 more than the cash price to get the interest "free" deal. The so called free offer was 28 percent more expensive than the $1,095 cash price.

The company has not yet been sentenced.

The Commission is also focusing on product safety and consumer information standards in this visit. This is an area that can be critical to customers but many businesses have little knowledge of the standards.

As well as visiting shops, the investigators will be speaking to business people at the local branch of the Retail and Wholesale Merchants Association, and to staff at the Citizens' Advice Bureau.

Chief Investigator Janet Whiteside, and Ngaio Hanlon, Pat Scriven and Alex McDonald will be in Cambridge on November 22 and in Hamilton from that evening until November 24.

Media contact:Chief Investigator Janet Whiteside

to November 21 phone work (09) 377 3094

November 22 -24 cell phone 025 473 141

Communications Officer, Vince Cholewa

phone work (04) 498 0920, home (04) 479 1432

BACKGROUND INFORMATION

The Commerce Commission

The Commerce Commission enforces the Fair Trading Act and the Commerce Act. It is a law enforcement agency, not a policy adviser to the Government. It is separate from the Ministry of Commerce and the Ministry of Consumer Affairs.

Its aim is compliance with the law, and it puts much effort into education of business people by visiting areas where it has no office, working with trade and professional organisations and conducting seminars. It also publishes a wide range of publications.

Most of its enforcement action is through warnings and settlements with businesses who may have broken the law. However, if these options do not work or if its first contact with a company is about a serious breach of the law, it will prosecute.

Fair Trading Act

The aim of the Fair Trading Act is to ensure that information is accurate so customers can make informed choices and are protected from unsafe goods. It applies to all aspects of the promotion and sale of goods and services, from advertising and pricing to sales techniques and finance agreements.

The Act prohibits:

  • conduct that is "misleading or deceptive or is likely to mislead or deceive"
  • false or misleading representations
  • unfair practices

    • Product safety standards:

    Safety standards can be added to the Act by the Minister of Consumer Affairs. Standards currently enforced through the Act cover:

    • toys for children aged up to three years
    • bicycles for road use
    • flammability of children's night clothes

    Consumer information standards:

    Consumer information standards can be added to the Act by the Minister of Consumer Affairs. Standards currently enforced throughout the Act are:

    • country of origin labelling of clothing and footwear
    • care labelling of textile goods (drycleaning, washing, ironing etc)
    • fibre content labelling of textile goods

    Investigation and enforcement:

    The Commission may initiate investigations into possible breaches of the Act in response to complaints or its own surveillance programmes. Following an investigation the Commission may

    • take no further action
    • refer the matter to a more appropriate authority
    • issue a warning
    • negotiate a settlement
    • take court action

    Penalties:

    The Commission is not a judicial body, only courts can impose penalties. They can impose fines of up to $100,000 on companies and up to $30,000 on individuals. They can also impose a wide range of orders and injunctions.

    In addition to any action the Commission may or may not take, customers, competitors and anyone else can take their own legal action under the Act to the Disputes Tribunal or courts.

    Recent enforcement action

    In the July 1 to September 30 quarter the Commission took action against 101 businesses, warning 94 and entering settlements with another 7. At the end of the quarter it had 37 Fair Trading cases before the courts or being prepared for court action. Court action finished in that quarter included:

    • a Christchurch lawyer and a company he is director of were fined a total of $20,000 for misleading people about land being sub-divided
    • a nationwide chain of stores was fined $20,000 for selling dangerous bicycles
    • another nationwide chain was fined $10,000 for selling a dangerous bicycle

    In June, the biggest fine so far was imposed when an Invercargill car dealer was found guilty of calling used cars new. The fine was $50,000.