First unsubstantiated claims case

The first ever conviction for unsubstantiated representations shows the importance of traders being able to back up the claims they make.

In September heat pump supplier Fujitsu General New Zealand Limited (Fujitsu) was fined $310,000 for making unsubstantiated or misleading claims about the energy efficiency and performance of some of its heat pumps.

The unsubstantiated representations provision of the Fair Trading Act came into effect in 2014 and this was the first time that a business has been convicted and fined for making unsubstantiated representations. An unsubstantiated representation is when there are no reasonable grounds for the representation at the time it was made.

“The efficiency of these heat-pumps was represented as a key selling feature, but without a proper scientific foundation for the claims,” said Commissioner Anna Rawlings.

Fujitsu made claims such as “NZ’s most energy efficient heat pump range” when it had no reasonable grounds to make those claims at the time of publication.

Fujitsu also made false or misleading claims, including that its e3 heat pump delivered “$4.92 heat for a $1 power”. That performance was achieved only under laboratory conditions and was not likely to be achievable by consumers in real-world conditions.

In sentencing in the Wellington District Court, Judge Ian Mill said "all the facts must have been known to the defendant company including the limitation of the test results.”

“Claims about things like energy efficiency, ‘organic’ and ‘made in New Zealand’ are important to consumers,” said Ms Rawlings. “The Fujitsu penalty illustrates that businesses must have a reasonable basis for the claims they make about their products at the time they make those claims, and claims must not be misleading,” she said.

In November 2015 the Commission issued a warning to Baa Baa Beads after it failed to substantiate its claims about the therapeutic benefits of its Baltic amber products.