Fujitsu General New Zealand Limited is the first business to be convicted and fined under the unsubstantiated representations provisions in the Fair Trading Act, which came into force in June 2014.
Under the Fair Trading Act a business must not make representations about its products or services if it does not have reasonable grounds for the representations when they were made. More information about these requirements can be found here: Consumer law reform: unsubstantiated representations.
Fujitsu pleaded guilty to seven charges under the Fair Trading Act for unsubstantiated representations made between June 2014 and October 2016 and was fined $310,000. On its website and in promotional materials, Fujitsu claimed that its heat pumps were "NZ's most energy efficient heat pump range" and that a particular range provided "better heat efficiency" and was "the most efficient system ever". Fujitsu accepted that it had no reasonable grounds to make these claims.
Fujitsu also claimed that its e3 heat pump delivered "$4.92 heat for a $1 power" and that it was a "breakthrough energy saver – delivers $4.57 of heat for every $1 of power used". However, these results were achieved in laboratory conditions and unlikely to be replicated in real-world household environments.
The Commerce Commission recognised that these types of claims
would be a key selling point and persuasive as they are made by a
well-known manufacturer. Consumers had to take them on trust and
would not have the means to independently verify them.
When the changes to the Fair Trading Act were enacted the Commerce Commission signalled it would be using its greater powers to come after businesses that flouted the law. The prosecution of Fujitsu is yet another example of this.
This case is a timely reminder of the significant consequences, both financially and reputationally, that a business can face if it intentionally or even carelessly makes statements about its products or services that it cannot back up. It is a lesson to all businesses to be vigilant in checking their marketing material to ensure any claims made can be substantiated.Download article in PDF format
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