Misleading Conduct - Another Well Known Trader Charged - Risks for all Traders - Consumer Lawyer Auckland - Dukesons Business Law

September 2016


Consumer Law and Contract Law


Misleading Conduct


The Bike Barn is yet another reasonably well known company alleged by the Commerce Commission to be flouting consumer laws. Given that all lawyers probably become cynical, as a consumer lawyer in Auckland, I'm not surprised that some well known entities might be under scrutiny.

All traders dealing with consumers should take note - that means any traders supplying goods or services of a kind that are ordinarily acquired for personal domestic or household use. If traders haven't consulted a good contract lawyer or consumer lawyer, they should do so. This relates to advertising, sales practices (whether floor sales or online sales), and to contracts and agreements including terms of trade.

In relation to Bike Barn, the CC has filed 16 charges against Bikes International Limited and Bike Retail Group Limited for misleading conduct under the Fair Trading Act. The CC alleged that advertised savings were bogus (that the advertised prices were normal prices) and that the advertised periods for taking advantage of the so called savings were also bogus (that the advertised prices were still applicable after the advertised period). According to the CC, Bike Barn intends to plead guilty to the charges.

Yet another reasonably sized player in the market apparently flouting the law. As I mentioned in an interview by NBR a week or two ago in relation to the Godreys case (see previous update), it's hard to believe that any trader of some size and repute, who has been around for some time, wouldn't know the law. A lot of publicly available information has been published (including by consumer lawyers and contract lawyers) and you would have to think that a trader would have sought legal advice. It might be some traders know full well what they are doing. And how many times on TV do you see regular advertisements from some traders advertising sales? So regular, that you have to wonder whether they have anything other than a so called sale?

Traders beware. If you don't want to trade completely honestly, the chances are that sooner or later you will be caught out. Lawyers will have given their clients clear messages in that regard. Current consumer laws require:

  • that conduct in trade mustn't be misleading or deceptive (applies to any dealings) - this includes advertising;
  • traders mustn't make unsubstantiated representations (applies to any dealings);
  • terms with consumers must be fair;
  • consumer guarantees under the Consumer Guarantees Act will apply except where some business purchasers fall within the definition of consumers and they agree, and it's fair and reasonable for them to agree, that the guarantees won't apply;
  • certain practices must comply with specific provisions in the Fair Trading Act e.g. in relation to extended warranties, door to door sales (uninvited direct sales).

This has obvious implications for contracts and agreements including terms of trade, which by now should have been revised to ensure that not only are they commercially effective, but that they comply with the law. Again, responsible traders should already have consulted consumer lawyers.

Post Script: Bike Barn fined $800k for misleading pricing

Bike Retail Group Limited and Bikes International Limited, the joint operators of Bike Barn in New Zealand, have now been fined $800,000 in the Auckland District Court. The two firms pleaded guilty to a combined 18 representative charges brought by the Commerce Commission under the Fair Trading Act regarding marketing and sales conduct between 1 July 2013 and 30 June 2015.

In sentencing Bike Barn, Judge Sharp noted the conduct was “pervasive” and “calculated”. “Consumers were disadvantaged by false statements, competitors may have been disadvantaged, but the real impact of these offences was that the public were entitled to be protected against things that give impressions that are not correct.”

Please contact me if I can help you with any contract law or consumer law issue, or with any business law or commercial law issues.

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