New Zealand Law Society - Car dealership fined for false claims

Car dealership fined for false claims

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The South Auckland car dealer, Zodiac Motor Company Ltd, has been fined a total of $105,000 in the Manukau District Court for falsely claiming that its cars were appraised by the AA.

Zodiac’s sole director Nezam Anwer also entered into undertakings with the Commerce Commission that he would pay any part of the fine that the company did not pay.

In a statement, the Commission says the dealership pleaded guilty to six charges brought by the Commission under the Fair Trading Act 1986. These related to false representations made during a 12-month period that vehicles advertised for sale were AA appraised, and that Zodiac was an AA Appraised Used Vehicle dealer.

The firm became an AA Appraised Used Vehicle Dealer in 2012 but two years later the AA removed Zodiac’s status due to its failure to ensure that at least 70% of its stock was AA appraised, as required.

However, Zodiac continued to promote itself as AA appraised on its website, at its car yard and in radio advertising. Zodiac also misleadingly advertised individual vehicles on its website as having gained the AA’s seal of approval.

In March 2015, Zodiac aired 151 radio advertisements stating “all cars are AA appraised” when Zodiac was not able to obtain AA appraisals for its vehicles as it was no longer an AA Appraised Used Dealer.

Judge Field said in sentencing that there were a number of aggravating features of the offending, including that through this false advertising Zodiac gained an unfair advantage over its competitors.

“There is a significant degree of recklessness in relation to the offending. The statements were a complete departure from the truth,” he said.

Commissioner Anna Rawlings says Zodiac’s misrepresentations were serious because they appealed to consumers by giving the dealership an air of trustworthiness.

“Zodiac provided consumers with a measure of comfort that the vehicle they were considering purchasing had been inspected by an impartial, reliable body – when it hadn’t,” she says.

“Purchasing an unreliable vehicle can cause a lot of stress and many consumers take steps to avoid that. Most consumers are not in a position to make their own safety and mechanical assessments of a vehicle so traders must ensure representations about the condition of a vehicle and any inspections are accurate.”

Zodiac was incorporated in September 2006 and sells used, imported vehicles from a car yard on Great South Road, Manurewa.

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