Op Shop operator ordered to pay reparation for Fair Trading breach

A Palmerston North man has pleaded guilty to breaching the Fair Trading Act by misleading consumers about the nature of a charity shop. He was ordered yesterday by the Palmerston District Court to pay $10,000 in reparation to two women’s refuges.

Peter James Linton ran the Palmerston North based Charitables Op Shop from 2003 to 2008. Goods sold in the shop were donated by members of the public and advertising for the shop stated that all proceeds went to Women’s Refuge. A Commerce Commission investigation found that less than 10 per cent of the shop’s profits were in fact distributed to Women’s Refuge.

In 2003, Mr Linton entered into an agreement with two local women’s refuges, Palmerston North Women’s Refuge and Te Roopu Whaka Ruruhau o Nga Wahine Maori, that the proceeds (less expenses) of all sales of Charitables Op Shop would go to those two refuges. The agreement also allowed refuge staff and clients access to donated goods without charge. Mr Linton then ran advertising for the shop which focussed on the message ‘All proceeds to Women’s Refuge.’ The Commission began an investigation after a complaint was laid by one of the shop’s volunteers.

“Mr Linton’s behaviour in misrepresenting what happened with the money made by the Charitables Op Shop was reprehensible,” said Adrian Sparrow, Commerce Commission Director of Fair Trading. “The business was only viable because of donations made by the public and the staff who volunteered their time to help run the shop, believing that women’s refuges would receive all proceeds. People buying items from the shop were also led to believe that the profits from the shop would be donated to charity. However, the primary beneficiary of the profits made by the shop was Mr Linton himself, not any charity.”

“Opportunity or charity shops are a common and successful way of raising funds for charities and it is important that consumers are able to have trust in their integrity,” said Mr Sparrow. “People need to be assured that any donation or contribution that they make actually reaches the associated charity. The Commission is pleased that the court has recognised that the women’s refuges should receive reparation.”

In sentencing, Judge Ross indicated that a $24,000 fine would usually have been appropriate, given the nature of the offending. However, the Judge accepted the submission that Mr Linton was not in a position to pay a substantial fine, and considered it appropriate that Mr Linton instead pay reparation to the two organisations affected, Palmerston North Women’s Refuge and Te Roopu Whaka Ruruhau o Nga Wahine Maori. They will receive $4,000 and $6,000 respectively.

Background
In May 2009 Peter James Linton pleaded guilty to five charges of intending to defraud and one charge of wilfully omitting to advise Work and Income and was sentenced to nine months’ imprisonment. Linton had been receiving an invalid’s benefit for his poor health since 2002, but he failed to notify the ministry about a business he began in 2003. The court heard that he had dishonestly obtained nearly $60,000 worth of benefit money.

The Fair Trading Act. Section 11. Misleading conduct in relation to services.
No person shall, in trade, engage in conduct that is liable to mislead the public as to the nature, characteristics, suitability for a purpose, or quantity of services.

Breaches of the Fair Trading Act may result in prosecution in court. Companies found guilty of breaching the provisions of the Fair Trading Act may be fined up to $200,000 and individuals up to $60,000. Only the courts can decide if the Act has actually breached.

The two Women’s Refuges that Mr Linton approached were the Palmerston North Women’s Refuge and Te Roopu Whaka Ruruhau o Nga Wahine Maori. Neither organisation gave their official approval for their name to be associated with Mr Linton’s business.