Noel Leeming Ltd has today been found guilty in the Christchurch District Court of four charges of making misleading claims in its "we will pay your interest" and "your interest paid" promotions.
It had previously pleaded guilty to two further charges of falsely claiming that the Commerce Commission approved the promotion.
The Commerce Commission brought the charges because customers who paid cash were charged a lower price than those who accepted a we will pay your interest offer.
Noel Leeming has not yet been sentenced.
Judge G.S.Noble found there is no effective difference between these promotions and interest free offers.
Commission Chairman Dr Alan Bollard said this is the third court decision in recent months to support the Commission's view that free means no extra charges.
"The courts have made it absolutely clear," Dr Bollard said. "We expect all retailers who use free and interest free promotions, by whatever names, to make sure they comply with the law.
"If they are unsure about their promotions they should get legal advice before continuing."
He said that until February 1993 Noel Leeming had used interest free promotions. The Commission discussed the offers with the company and it changed the wording of the promotions to "we will pay your interest". Dr Bollard said the Commission's view was that this was still misleading.
Judge Noble found: "It is the purchaser who pays the interest, and I hold that it is simply not true to say that the vendor will pay the interest which it patently does not. Viewed objectively, in each case the advertising would very easily cause some people to think that they were not paying any interest at all. In this case some in fact gained that impression from the advertising."
Dr Bollard said the court has upheld the Commission's view as stated in interest free and free credit guidelines it published in 1994.
"The guidelines are still available and I strongly advise retailers and their legal advisers to read them."
Media contact: Communications Officer Vincent Cholewa
