More action on fine print: Cellphone Accessories fined $6,000
Published24 May 2000
Commerce Commission action against fine print continued today, with the North Shore District Court fining Cellphone Accessories Mail Order Service Limited $6,000 for making false or misleading claims about prices.
Commission Chair John Belgrave said that Cellphone Accessories used graphics and voice-overs in television advertisements to promote prices for various cellphone accessories. However, it was only stated in small print that the prices were exclusive of GST.
The Commission's view is that advertising cannot use small print to tell consumers that prices are GST exclusive. In this case the problem was compounded by the small size of the print and it being flashed on the screen quickly.
"Customers could not buy the goods for the prices advertised," Mr Belgrave said, "therefore, the representations about the prices were misleading and the small print could not fix this."
In May last year the Commission interviewed the company's sole shareholder and warned him that, in its opinion, the advertising risked breaching the Fair Trading Act. The Act prohibits false or misleading claims about prices. The shareholder said that he would change the advertisements.
However, in July the advertisements were still being screened unchanged. In August the shareholder was interviewed again and denied having been previously warned by the Commission.
The Commission then took court action against the company, which today pleaded guilty.
Mr Belgrave said that use of fine print in advertising is an on-going problem that the Commission will continue to take action against.
Background: "Small print cannot save a representation from being misleading"
In a precedent setting case involving a different company, the judge stated: "small print cannot save a representation from being misleading."
The precedent set was that the judge ignored the fine print and looked at the impression the advertising made on the customer. He stated that if that impression was misleading, then fine print would not save the company from convictions and fines.
Mr Belgrave said that the Commission's advice to advertisers is that the impression created by large text, pictures, colour, music and the other bold or prominent elements used in advertising is all important.
"All important conditions must be accurately and clearly explained up front, not just in small print," Mr Belgrave said.
"If the style of advertising proposed does not allow that, then the style should be changed. If the style cannot be changed and still convey the message, then some hard questions have to be asked about the message. How accurately does it describe the goods or services offered? Is it at risk of misleading consumers? If it does risk being misleading, then the advertiser risks breaching the Act, being prosecuted and fined up to $100,000."
