Fair Trading Act does apply to websites: Michael Hill Jeweller Ltd fined $1,000
Published06 Sep 2000
The Commerce Commission's prosecution of Michael Hill Jeweller Limited has shown that the Fair Trading Act applies to claims made on websites.
The Whanagrei District Court today fined Michael Hill Jeweller $1,000 plus $130 costs for breaching the Act by advertising "Collisee" brand Cartier watches on its website when it did not have reasonable grounds to believe that it could supply the watches.
Commission Chair John Belgrave said that this is the second e-commerce case the Commission has taken in the last month.
"As new e-commerce questions arise under the Act, we will continue to use the courts to develop the law," Mr Belgrave said.
In this case, Michael Hill Jeweller admitted advertising watches that were no longer available.
"The problem with such advertising is that it can entice consumers into a store with an offer that is not genuinely available," Mr Belgrave said. "Once in the door, consumers are more likely to buy. That means consumers do not get what they were offered and competitors are disadvantaged."
Michael Hill Jeweller had been a Cartier agent until late last year. After its agency ended it held clearance sales for the remaining Cartier watches and, in December, started advertising them on its website. However, the website did not state what watches had been sold-out.
The Commission's investigation showed that Michael Hill Jeweller continued to advertise Collisee watches for 20 days after stocks had sold-out and no more would be available.
"There are two messages here for businesses advertising on websites," Mr Belgrave said. "First, the Act applies to the claims made. Secondly, keep the website up-to-date to ensure that the claims made are still accurate."
Background
Last month the Auckland District Court ordered Neil Jeffrey Crozier and Suzie Dianna Crowe to pay fines and costs of $4,120 for breaching the Act by making false claims that businesses needed the services of the website and e-mail addresses created by Mr Crozier and Ms Crowe.
Mr Crozier and Ms Crowe had registered as Internet domain names the names of 11 cleaning companies with substantial advertisements in the Auckland Yellow Pages telephone directory. They set up a website and e-mail addresses uses the businesses names, made false claims about the numbers of visitors and e-mails to the website and tried to sell back to each business its own domain name and e-mail address.
