This case serves as a reminder to local and international retailers, to be wary of what representations they make in New Zealand about their products and to ensure they meet all standards required. Especially for standards that can be complex or in this instance health related, it is imperative that companies have credible research or evidence to support the claims they make about their products.
Nationwide dessert companies Frozen Yoghurt Limited and Yoghurt Story New Zealand Limited (the parent companies of the franchised network of 'Yoghurt Story' businesses) were recently fined $270,000 after a prosecution brought by the Commerce Commission. This related to misleading representations of the health benefits of yoghurt as well as their product simply not being yoghurt at all, as it failed to meet the definition of yoghurt according to the Australia New Zealand Food Standards Code. Judge Sharp in the Auckland District Court dismissed the charges brought under section 13 (false representations) of the Fair Trading Act and instead found Yoghurt Story guilty under section 10 (misleading conduct), as he regarded the conduct to be misleading as opposed to completely false. It was that the product they sold was not yoghurt rather than whether the health benefits of yoghurt were true hence the dismissal of section 13 charges.
Judge Sharp found that Yoghurt Story knew that their product was closer to an ice cream product rather than frozen yoghurt, yet continued to make misleading representations. He regarded Yoghurt Story as engaging in "a cynical attempt to take advantage of consumers desire to make healthier food choices". He balanced this with a view that the Act recognises that consumers who buy products on the basis of representations do so with a great deal of trust. Because of this, a significant fine of $270,000 was imposed. However since the two parent companies were both in liquidation, these fines were reduced to only $70,000.
The Fair Trading Act is designed to protect consumers from companies taking advantage of consumers with false claims and the New Zealand Commerce Commission frequently brings prosecutions against businesses for misleading conduct. Alongside this the Courts are now following a tough approach to any misleading conduct that is brought to their attention.
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