The Commerce Commission has filed 13 representative charges against The TV Shop (Brand Developers Limited), that focus on marketing and promotional practices it believes are likely to mislead Kiwi consumers.
Commerce Commission's General Manager of Fair Trading, Vanessa Horne says, "this case involves three different kinds of representations made to consumers which the Commission alleges were misleading. It should emphasise for businesses the importance of making sure that all promotional and marketing activities are accurate, unambiguous and not misleading."
The Commission alleges that The TV Shop breached the Fair Trading Act by:
- misleading consumers about the popularity of goods when staff members posted reviews on various online review platforms about products without disclosing their affiliation to the business and removed some low-rating reviews on its own website.
- misleading consumers about remedies available to them if something went wrong with their products by implying to consumers that they did not have any other rights to refunds or remedies outside of its own '30-day Money Back Guarantee scheme' or 'risk-free trial' when consumers wanted to return products because they believed they were faulty or mis-advertised. In fact, consumers may have had rights and remedies available to them under the Consumer Guarantees Act.
- misleading consumers about the nature of products sold when it advertised promotion(s) for its Air Roaster Pro, offering an accessory pack variously as "free" or a "bonus" and on a "special offer" when the Air Roaster Pro was never offered for sale without the accessory pack, and the product was sold as a "special offer" continuously between 2018 and 2021.
"Consumers are entitled to take information provided by retailers at face value whether that information relates to pricing, the nature of the products on offer, consumer rights or the endorsement or experiences of other consumers. These issues go to the heart of the Fair Trading Act and the Commission's compliance and enforcement work.
"Businesses should check they have compliant reviews processes and policies, training processes in place regarding rights to refunds or remedies, and compliant promotional practices."
Ms Horne says that whilst consumers are entitled to trust the representations that businesses make are accurate, they are also encouraged to pause and shop around before rushing into a purchasing decision.
"Read reviews across different platforms to get a picture of the product you're buying, read the terms and conditions and understand your rights under the Consumer Guarantees Act. If time allows, track prices over time and shop around to make sure you're getting the deal and making the savings that you expect."
The Commission has previously successfully prosecuted The TV Shop twice since 2015. In 2022, The TV Shop was fined $123,500 after failing to comply with extended warranty disclosure requirements, and in 2015 the business was fined $153,000 for misrepresentations that a ladder being sold or advertised had a certification when it did not.
As this case is before the Court, and ultimately it is for the Court to determine The TV Shop's liability under the Fair Trading Act, the Commission cannot comment any further at this time.
Background
Online reviews
Online reviews provide an increasingly important source of information for consumers contemplating the purchase of goods and services. Reviews must be genuine and presented in a way that does not mislead the reader about the overall message intended by the reviewer. The Commission has published guidance to assist businesses to meet their legal obligations when they collect or publish customer reviews here.
Rights under Consumer Guarantees Act
Under the Consumer Guarantees Act, products are guaranteed to be fit for purpose and of acceptable quality. These guarantees are implied by law. They do not need to be written into a consumer contract and they apply in addition to any written warranty provided by a manufacturer or retailer. In addition, manufacturers and retailers cannot contract out of the guarantees that apply to them when goods are ordinarily acquired for domestic or household use, regardless of the terms and conditions which a business has in place. It is an offence under the Fair Trading Act to mislead consumers about their rights, including their rights under the Consumer Guarantees Act.
There is more information about consumers' rights under the Consumer Guarantees Act here.
Online sales practices
Consumers increasingly shop online and rely on claims businesses make on their website about goods and services. In many cases, consumers cannot establish for themselves if these claims are accurate. Claims about the availability or popularity of goods or services can influence a consumer to make a purchase. As with all claims that businesses make, claims made online must be clear, accurate and unambiguous and businesses must be able to substantiate them – back them up.
The Commission has published guidance to assist businesses to meet their legal obligations when they carry out online sales practices. There is more information here.
