Furniture store fined for Fair Trading Act breaches

A furniture store has pleaded guilty to 28 charges of breaching the Fair Trading Act by providing misleading information about the savings that consumers would make by buying goods on sale. The company has been fined $28,000 plus court costs of $3,640in the Manukau District Court.

Throughout the first six months of 2008 Redpaths Furniture Limited promoted sales on furniture, such as lounge suites and beds, through flyers and newspaper advertising. The Commerce Commission’s investigation focussed on four furniture products and found that the goods had not been available at the advertised ‘regular’ price during the first six months of 2008.

“Many businesses promote sales by indicating a price that the goods normally cost compared with the sale price. Redpaths misrepresented the ‘regular’ price of their furniture which made the advertised savings for the consumer appear larger than they really were,” said Adrian Sparrow, Commerce Commission’s Fair Trading Director.

“It is important that businesses understand their obligations under the Fair Trading Act and have effective compliance programmes in place to ensure that all their business activities, including advertising, don’t break the law,” said Mr Sparrow.

Background
Redpaths Furniture Limited sells furniture products and currently operates four stores in the Auckland and Hamilton regions.

 

The Fair Trading Act - Section 13. False (or misleading) representations
No person shall, in trade, in connection with the supply or possible supply of goods or services or with the promotion by any means of the supply or use of goods or services,—
(g)Make a false or misleading representation with respect to the price of any goods or services.

Only the courts can decide if the Act has been breached. Companies found guilty of breaching provisions of the Act may be fined up to $200,000 and individuals up to $60,000.

In June 2007, 230 Marua Limited, an Auckland leather furniture company, was found guilty on six charges of breaching the Fair Trading Act and fined a total of $36,000, over misleading claims about the ‘sale’ price of furniture.
In June 2006, clothing and outdoors retailer Kathmandu was fined $28,000 for misleading claims in relation to ‘sale’ items.