Third Fair Trading Act prosecution of furniture retailer in a month:
Media Release 2000/35
The Commerce Commission’s prosecution of Waitemata Backcare Beds and Waterbeds Limited highlights one of the main
concerns the Commission has about furniture retailing: "interest free" offers must be the same as the cash price.
"If customers pay more for hire purchase than the cash price, then it is not interest free," Commission Chair John
"Courts first ruled on this issue many years ago, and have given the same decision many times since," Mr Belgrave said.
"It is false or misleading and a breach of the Fair Trading Act to describe a hire purchase offer as ‘interest free’
when customers must pay insurance, booking fees administration costs or any other charges.
"Retailers can impose fees and interest but they must then disclose them clearly and accurately and must not call it an
‘interest free’ offer.
"Such false or misleading claims harm consumers and competitors who accurately describe promotions. Consumers end up
paying more and honest competitors lose business unfairly."
Waitemata Backcare Beds and Waterbeds has been fined $3,500 by the Waitakere District Court after admitting that its "0%
interest free fiesta" was not genuinely interest free—compulsory additional costs were not disclosed in the advertising.
This prosecution was part of the Commission’s crackdown on what it believes are widespread Fair Trading Act problems
among furniture retailers. It was the third prosecution in a month.
On March 31 the Napier District Court fined Furniture Now Limited for advertising a "fantastic start up package deal"
but not providing all the items advertised, and for describing pine furniture as "solid rimu". On April 11 the Upper
Hutt District Court fined Hazelwoods Home Traders Limited $15,000 for breaches similar to those committed by Furniture
"Last year we had many meetings with retailers and the Retail Merchants Association to explain the law and to help draft
advertising guidelines specifically for furniture retailers," Mr Belgrave said. "The Association was highly co-operative
and put a lot of its own time into educating its members.
"We followed up with settlements with retailers who were at risk of breaking the law. Now we are taking prosecutions
because, disappointingly, some retailers have not complied."
The most common Fair Trading Act issues among furniture retailers are:
false or misleading claims about prices, including claimed "interest free" deals that are not genuinely interest free
false claims about the composition of furniture
not providing the goods advertised, and
offering gifts or prizes and not providing them.