Commission issues warning to Hong Kong based electronics retailer

Online electronics retailer BXT International Limited and its related companies (together known as Becextech) have been warned by the Commerce Commission for conduct that the Commission considers has likely breached the Fair Trading Act.

The warning follows a Commission investigation into the Hong Kong based company which sells electronic goods such as mobile phones, computers, tablets, and digital cameras through its website.

In the Commission’s view, Becextech has likely breached the Fair Trading Act by:

  • failing to clearly disclose that some mobile phones it was selling were refurbished, thereby misleading consumers into believing that they were buying new mobile phones at discounted prices
  • selling extended warranties that did not contain the mandatory information required to be disclosed to consumers by the Fair Trading Act
  • making unsubstantiated and false or misleading representations about the price of goods by representing certain goods as being available at discounted prices and ‘on-sale’ without having reasonable grounds to support the level of discount claimed.

Commission Chair Anna Rawlings says consumers are protected by law against advertisements that create misleading impressions about a product’s features and previous use.

“Like any trader carrying on business in New Zealand, Becextech must comply with the Fair Trading Act and ensure they are not misleading consumers.”

“That includes not giving a misleading impression that products are new if, in fact, they are refurbished, and complying with mandatory requirements when selling extended warranties. It is the Commission’s view that Becextech failed to do this,” said Ms Rawlings.

Becextech also made special ‘on sale’ price claims, that in the Commission’s view, could not be backed up and were misleading. By law, businesses must have reasonable grounds for making a pricing claim at the time it is made.

“Consumers need to be able to rely on the accuracy of business’ claims. Specials and deals need to offer consumers genuine savings when compared with the price they might ordinarily expect to pay and products should not be promoted in ways that entice customers to buy under false pretences,” says Ms Rawlings.

As a result of the Commission’s investigation, Becextech has agreed to make changes to its practices including:

  • adding “refurbished” as the first word in relevant product descriptions
  • stopping the sale of extended warranties
  • altering pricing practices to ensure that any discount claims made refer to a price recently charged by the company, as well as being able to be substantiated.

The warning letter has been published on our case register.

Background

Unsubstantiated claims

Consumers need to be able to rely on the accuracy of claims. It is illegal for a trader to make a claim about a good or service without any reasonable basis. You can watch our video If you can’t back it up, don’t say it and see more about unsubstantiated representations here.

You can also find information on the rules around pricing on our pricing webpage.

Australian Competition and Consumer Investigation

As a result of an investigation conducted by The Australian Competition and Consumer Commission (ACCC) in relation to the company’s Australian website, Becextech entered into enforceable undertakings with the ACCC in December 2017, agreeing to take various steps to comply with the Australian Consumer Law.

Warning letters

A warning is not a finding of non-compliance; only the Courts can decide whether a breach of the law has occurred.

The purpose of a warning letter is to inform the recipient of the Commission’s view that there has been a likely breach of the law, to prompt a change in the recipient’s behaviour, and to encourage future compliance.

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