As part of a settlement with the Commerce Commission, Ford Motor Company of New Zealand Limited has admitted its Shoctober promotion breached the Fair Trading Act because extra costs were not explained, and is paying refunds to 121 customers.
Commission Chairman Dr Alan Bollard said Ford co-operated with the Commission throughout its investigation and the company came to the Commission with an offer to pay refunds.
"While it is better for everyone that the law is not broken in the first place," Dr Bollard said, "Ford's subsequent actions have been a good example of responsible corporate behaviour.
"It admitted that its nation-wide television promotion was misleading, it is making recompense to customers who were disadvantaged, it is changing its compliance programme to ensure it does not breach the Act in future and is organising a seminar for the motor industry which the Commission will be invited to address so that the whole industry can learn from this case."
The breach came about because the prices stated in the Shoctober promotion did not include compulsory "on road" costs of up to $490 depending on the model of car.
Ford realised there was a problem with the advertisements and amended them by adding small print. However, it has since accepted that the small print was too small and not on the screen for long enough to be read.
After the Commission's investigation concluded that, in the Commission's view, the advertisements breached the Fair Trading Act, Ford offered a settlement to the Commission. The Commission has accepted the settlement.
Included in the settlement is an undertaking that Ford will within one month write to all 121 customers who paid the advertised Shoctober prices to explain its mistake and to include a cheque to refund the on road costs.
The settlement also includes an admission that the advertisements made false or misleading claims about prices and so breached the Act.
Dr Bollard said that not clearly disclosing extra costs is a problem the Commission has encountered in several industries. In cases that the Commission has taken to court, three cellphone retailers were fined a total of $18,900, a bank was fined $16,000, a builder and a real estate firm were ordered to pay a total of $12,000 in fines and refunds and a car dealer was fined $2,000.
"Any extra costs and all important conditions must be shown clearly," Dr Bollard said.
"If there are too many extra costs and conditions to include for an advertising campaign to still have impact, then the idea behind the campaign is almost certainly misleading, and the campaign should be changed.
"Fine print may not be enough to stop it being misleading and breaching the Fair Trading Act."
Media contact: Fair Trading Manager Rachel Leamy
Phone work (04) 498 0908, cellphone 021 662 773, home (04) 386 3110
