Disappointing Fair Trading compliance by furniture retailers: four prosecutions, more may follow
Published16 Nov 1999
The Commerce Commission sees furniture retailers' compliance with the Fair Trading Act as poor, it is prosecuting two retailers, is preparing prosecutions against two more and more court action may follow.
"It is disappointing that it is still common for furniture retailers to make what the Commission sees as false or misleading claims," Commission Chairman John Belgrave said.
"We have had many meetings with retailers and the Retail Merchants Association to explain the law and to help draft advertising guidelines specifically for furniture retailers," Mr Belgrave said. "The Association was highly co-operative and put a lot of its own time into educating its members.
"We followed up with settlements with retailers who were at risk of breaking the law.
"Now we are taking prosecutions because, disappointingly, the message did not get through. If compliance does not improve in the near future, then even more court action is likely."
The Commission's legal advice is that it should not name any of these companies until they have had their first call in court.
The most common Fair Trading Act issues among furniture retailers are:
- false claims about the composition of furniture typically, describing furniture made from chip board covered with a veneer as "solid timber" and claiming furniture is made from more expensive or exotic timber when it is not
- false or misleading claims about prices primarily "interest free" promotions that are not genuinely interest free
- offering free gifts or prizes and not providing them, and
- not providing the goods advertised often, pictures have been of items more expensive than those actually available at the advertised prices.
"Taken together, these issues show a significant problem," Mr Belgrave said. "All households buy furniture it is a major part of consumer spending. Widespread false or misleading claims in this industry have the potential to harm many consumers.
"This is not new law. The Act was passed in 1986 and the courts have previously made decisions on all these issues.
"Some years ago similar problems arose with appliance dealers. We took prosecutions, and compliance improved markedly.
"Happily, most of our contact with appliance dealers today is educative. I hope we will soon be able to say the same of furniture retailers."
Background
The Fair Trading Act prohibits false or misleading claims. It exists because accurate information is vital for healthy competition and consumer choice. If information is false or misleading, then consumers lose out and competitors are disadvantaged.
Under the Act, courts can impose fines of up to $100,000 on a company and up to $30,000 on an individual. They can also impose a wide range of orders and injunctions.
An important feature of the Act is that it allows anyone including competitors, customers, and the Commission to take legal action. It is becoming increasingly common for businesses to use it to seek damages, orders and injunctions against competitors who have gained an unfair advantage by making false or misleading claims.
Media contact: Acting Fair Trading Manager Ross McPherson
