The company behind the Contours women's gyms, Contours Exclusive Limited, and its co-owner and Managing Director, John Wayne Bishop, were ordered to pay a total of $6,150 today after breaching the Fair Trading Act by publishing misleading advertisements 49 times.

Commerce Commission Chairman Peter Allport said that the case has set a significant precedent as it is the first time under the Act that a director has been convicted as a party to offending by the company.

Mr Allport said the Auckland District Court's decision sends a strong warning to all directors.

"If directors fail in their responsibilities, whether deliberately or through carelessness, they can be parties to their companies' actions and can be personally charged and convicted under the Fair Trading Act.

"If they are unsure of what the Act requires, then they should get legal advice."

There is also a message to all gyms. Free offers and special deals are commonly used in membership promotions. All offers and deals must be genuine. If they are false or misleading, then they breach the Act and customers, competitors, or the Commission can take action against them.

In this case, Contours published misleading advertisements offering a range of free offers and special deals in Auckland and Dunedin. During the advertising, 5,576 people joined the five Contours gyms in those cities.

"Customers were duped into buying gym memberships at what they thought were significantly cheaper prices," Mr Allport said. "However, in reality they were charged the normal prices."

The Act prohibits false or misleading claims about prices. The Commission prosecuted Contours and Mr Bishop. Both pleaded not guilty but were found guilty by the Court last month. They were sentenced today.

Background

Contours Exclusive Limited is the franchisor of the Contours Women's Gymnasiums throughout New Zealand and has its registered office in Balclutha.

Mr Bishop is co-owner and Managing Director of Contours Exclusive Limited, owner and Manager of Contours Dunedin Limited and a Director and shareholder of Contours Greenlane Limited.

The specific misleading claims made were:

12 months membership at 6 month price published 17 times

18 months membership at 6 month price published 4 times

$100 off published 6 times

free 6 months published 15 times

join for winter and get summer free published 7 times

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