The latest Commerce Commission action against false invoicing scams has resulted in the highest total fine to date under the Fair Trading Act.

Two linked companies, Colrayne Holdings Limited and Spencer York Publishing House Limited, have been fined a total of $67,500 by the North Shore District Court.

Commission Chairman Peter Allport said that false invoicing costs New Zealand businesses millions of dollars a year. It involves businesses being tricked or bullied into paying for advertising that they never ordered.

"I am delighted with the message sent by the Court," Mr Allport said. "False invoicing rips off businesses, hurts legitimate publishers and damages the reputation of other organisations. The fines show that courts will not take such behaviour lightly."

In this case legitimate advertisements from the Police Association Handbook, the Yellow Pages and other publications were copied by Colrayne and Spencer York. Colrayne and Spencer York salespeople would then phone the advertisers and state, or strongly assert, that they had spoken previously and that the advertisers had agreed to place the advertisements in their magazine.

However, the previous conversations had not taken place and there had been no agreement to place further advertising. The real purpose of the phone calls was to trick advertisers into authorising advertisements they had never ordered.

The advertisers would then be faxed proofs of the advertisements and would be invoiced by Colrayne or Spencer York as if they had agreed to place advertising.

A tactic used when a manager was away was to contact the receptionist, falsely say that the manager had authorised the advertisement, and ask the receptionist to check some of the details. Any statement that the details were correct would be misused as "proof" that the advertisement had been approved.

In other cases advertisers were invoiced even though they had told the salesperson that no advertising was wanted in Colrayne or Spencer York magazines.

The Commission is continuing action against false invoicing, and has a prosecution starting on Monday next week in the North Shore District Court. In that case the Commission alleges that four companies, Zennith Publishing Limited, Debson Holdings Limited, Summit Publications Limited and Pana Publishing Limited, made false claims that people had authorised advertising, when they had not.

In February a company director, Peter Ian Dey, was convicted and fined for his part in his company, PKL Publishing Company Limited, issuing false invoices for advertising. The court said that Mr Dey and PKL would have been fined far more than the $5,000 imposed but for the company being in liquidation and Mr Dey being unemployed.

"We have, and will continue, to take enforcement action against false invoicers," Mr Allport said. "But business people must help themsleves too. The best long-term deterrent is to not pay for advertising that was not authorised or that they were misled into authorising. People will only run scams if they can make money from them.

"The most effective way for businesses to protect themselves is to have standard, efficient procedures for ordering goods and services, checking that they receive what was ordered and approving payment."

In August last year the Commission printed guidelines explaining how businesses can protect themselves against false invoices. The guidelines have already been reprinted twice because of the demand for them. Copies are available free of charge from Commission offices.

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 website www.comcom.govt.nz