AUCKLAND: One of New Zealand's biggest retailers has pleaded guilty to several breaches of the Fair Trading Act.
The Warehouse – which operates 85 stores stocking a range of products including fashion, lifestyle products, entertainment, technology and music - has been fined a total of NZ$209,600 (A$162,400) in the Auckland District Court.
The charges related to misleading consumers about the advertised price of goods, using bait advertising, making false claims that products were ‘exclusive to The Warehouse’ and false labelling, confirmed Adrian Sparrow, Commerce Commission director of fair trading.
“The Warehouse is one of the biggest retailers and advertisers in New Zealand, reaching millions of consumers via their advertising mailers and having a high turnover of goods. When a company such as The Warehouse breaches the Fair Trading Act thousands of consumers can be seriously affected. Competitors that do comply with the Act also suffer,” Sparrow said.
“The wide range of charges indicates that The Warehouse needs to ensure their compliance systems and staff training are of a sufficiently high standard so that they do not breach the Fair Trading Act and mislead their customers in the future. It is particularly disappointing to have to take action against The Warehouse as, under a 2004 Commission settlement, they had undertaken to improve both their staff training and compliance programmes relating to the Fair Trading Act. While The
Warehouse did implement some Fair Trading Act compliance training as a result, it appears that they did not significantly enhance their compliance systems until 2008 – some time after the present proceedings were initiated."
Case judge Judge Harvey also noted that the retailer's actions were "demonstrative of carelessness and lack of cohesion within a large retail organisation, well known throughout New Zealand which advertises heavily in all media. One would have expected that such an organisation with such a considerable reliance on advertising and, no doubt, a significant advertising budget, would ensure compliance with the Fair Trading Act especially in regard to such simple matters as ensuring that products claiming to be exclusive would be as such.”
The Warehouse employs over 8,500 people and operates an annual advertising budget of $34 million, advertising via newspapers, television, radio and mail-out brochures.