Old phones for new? Retailer admits cordless phones were second-hand
20 January 1999
Retail chain Hill & Stewart Appliances Limited admitted in the Auckland District Court today that its promotion of Sanyo cordless telephones failed to clearly disclose that the telephones were second-hand and was therefore misleading and breached the Fair Trading Act.
The Commerce Commission prosecuted Hill & Stewart, the company pleaded guilty today and was fined $2,500 plus $409.95 costs.
Commission Chairman Peter Allport said that the telephones were included in a promotion publicising the opening of Hill & Stewart's Newmarket Store in October last year.
"There is nothing wrong with selling second-hand goods, but they must be described clearly and accurately in language that customers will understand," Mr Allport said. "Unfortunately, that was not the case here."
Advertisements included small print bullet points stating:
"· Hands free speaker
· 10 channel auto scan
· Dual key pad
· Second selection"
Hill & Stewart had instructed its advertising agency to use the words "second selection" to describe the telephones as seconds that had been sold to customers in New Zealand and had been returned.
The telephones had been checked before re-sale and had a three month warranty.
Mr Allport said this case has an important message for all advertisers.
When the consumer who complained to the Commission discussed the Sanyo cordless telephones with a Hill & Stewart sales assistant she was told that the telephones had been reconditioned. However, this did not save the company from conviction.
"If advertising is misleading or deceptive, then it is not a defence to try to correct it at the point of sale," Mr Allport said.
"Misleading or deceptive claims can attract customers to a business and they are then more likely to buy. That disadvantages consumers and competitors.
"All advertisers must be aware of this. If they are not, then they run the risk of breaching the Act and face the possibility of legal action from customers, competitors or the Commission."
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 web site www.comcom.govt.nz