Court sets precedent for all retailers interest free price must be same as cash price
Published17 Nov 1995
In the first defended case of its kind, the Auckland District Court has today defined when so called interest "free" offers are misleading and breach the Fair Trading Act.
"The Court has ruled that where goods are advertised at a cash price and interest free, then the interest free price must be the same as the cash price," Commerce Commission Chairman Dr Alan Bollard said. "This is the approach the Commission has taken for some time and now the Court has supported that view by finding Mt Albert TV guilty of breaching the Act.
"This is a clear message to all retailers who use interest free promotions," Dr Bollard said.
"We publish a free pamphlet about how the law may apply to interest free promotions. If retailers do not have a copy yet, I strongly advise them to get one."
The Commission prosecuted Mt Albert TV after the company used newspaper advertisements to promote an "interest free terms to two years" offer on video players.
However, a customer who wanted to take up the offer, found that he would have to pay $304 more than the cash price to get the interest "free" deal.
"The so called 'free' offer was 28 percent more expensive than the $1,095 cash price," Dr Bollard said.
When interviewed by a Commission Investigator, the company staff member responsible for the format of Mt Albert TV's advertising said that he did not think there was any such thing as a truly interest free transaction in this field.
Judge Roderick Joyce QC did not sentence Mt Albert TV today. A sentencing date will be set by the Court.
The Commission is also prosecuting Noel Leemings for allegedly breaching the Act in relation to interest free promotions. This case should be heard in the Christchurch District Court on February 12 next year.
