Issued 30 May 2001/62
Signature Security Systems Fined $10,500 For Misleading Advertising In Yellow Pages
The Christchurch District Court today fined one of the country's biggest security firms, Signature Security Systems
Limited, $10,500 for making misleading claims about the cost of its monitored alarms.
Commerce Commission Chair John Belgrave said that it is disappointing that a security firm has been convicted of
breaching the Fair Trading Act.
"Security firms promote themselves as protecting personal safety, and here is Signature-a major player in the
industry-breaking a law intended to protect consumers."
Judge Ryan said that the level of fine should be seen as a warning to security firms. He said that future breaches by
Signature or other firms could attract much higher fines.
Mr Belgrave said that Signature did not disclose substantial additional costs in its Yellow Pages advertising. The
advertisements were in Yellow Pages directories throughout the country.
Signature offered "Fully monitored alarms installed from just $295* plus GST". In small print at the bottom of the
advertisements was "*conditions apply".
However, the total cost was $2,095, being the $295 installation fee plus $30 a month for a compulsory five-year
contract. The additional $1,800 cost of the contract was not disclosed in the advertisements.
Also, customers did not buy the alarms, they leased them. Throughout the contract, and at its end, the alarm and other
hardware installed remained the property of Signature.
Mr Belgrave said that all advertisers must take particular care when using long-term media like the Yellow Pages because
advertisements are there for a long time before they can be changed.
"It is not like daily media where changes can be made or corrective advertising published quickly. False or misleading
ads in the Yellow Pages are there for a year.
"That is a long time in which to upset consumers and competitors, both of whom can take their own legal action or make
complaints to the Commission."
Background
The Fair Trading Act prohibits conduct liable to mislead the public as to the nature or characteristics of goods
(section 10).
The Act also prohibits false or misleading representations about the price of goods or services (section 13(g)).
Ends