Court ruling a win for consumer rights
Court ruling a win for consumer rights and reminder to
traders
Issued 9 September 2014
Release No.
29
The Commerce Commission says a recent precedent-setting Court of Appeal decision is a win for consumers and a reminder to traders tha¬t it is not good enough to hide important information in fine print, or where consumers need to hunt for it.
The case involved a dispute between carpet manufacturers Godfrey Hirst and Cavalier Bremworth. Godfrey Hirst alleged that Cavalier Bremworth’s claims about its “superb lifetime” carpet warranties were misleading. Godfrey Hirst alleged that claims about the warranties were misleading because the benefits of the warranties were significantly limited by terms and conditions contained in fine print or on a separate webpage.
Godfrey Hirst was successful with some of its claims in the High Court, but appealed to the Court of Appeal to seek guidance on matters dismissed by the High Court.
The Commission was granted leave to be heard in the Court of Appeal. The Commission’s General Counsel, Competition, Mary-Anne Borrowdale, said, “We became involved in the appeal because the consumer issues were of significant public interest.
“We have become increasingly concerned about the prevalence of misleading headline claims in advertising, especially online, where bold headline statements are made but they are then undermined by terms in the fine print. We want businesses and consumers to have a clear sense of what the ground rules are.”
The Court of Appeal decision clarified a number of
important points, including that:
• All
consumers are entitled to the protection of the Fair Trading
Act, not just the knowledgeable, well-off or
sophisticated.
•
•
• Claims are made to all
members of the target audience, except for “outliers”
which includes those who are “ill-equipped” or “whose
reactions are extreme or
fanciful”.
•
•
• When assessing whether a
claim breaches the Fair Trading Act, it is the dominant
message of the headline that is
important.
•
•
• Where there is a glaring
disparity between the dominant message of the headline and
the information qualifying it, the maker of the statement
must draw the disparity to the consumer’s attention in the
clearest possible way.
•
•
• The Fair
Trading Act will be breached where a claim has lured a
consumer into “the marketing web” by misleading means.
It does not matter that the consumer may come to appreciate
the true position before the transaction is
completed.
•
•
“We are pleased to have the
guidance that this judgment provides, which we think sets
clear rules for traders and goes a long way to ensuring New
Zealand consumers are protected from misleading trade
practices,” Ms Borrowdale said.
The Court of Appeal ruling can be viewed on the Commission website: www.comcom.govt.nz/court-ruling-a-win-for-consumer-rights-and-reminder-to-traders/
ends