Story image

Can you back up your marketing claims? ComCom campaign aims to help out

16 Jul 18

From telcos to heatpump suppliers to nutritional supplement companies, the Commerce Commission’s message is the same: you must be able to back up your marketing and advertising claims.

Commissioner Anna Rawlings says, “the basic rule of thumb when it comes to advertising or making claims about products or services is ‘if you can’t back it up, don’t say it’.”

And that’s the title of the Commission’s recent video which is intended to help traders avoid making claims that will land them in the courts.

The biggest relevant fine so far was for a company in the food sector, but the lessons from that case apply to all traders.

In May 2017 Topline International Ltd and its principal shareholder Jeffrey Cook were fined a total of more than $500,000 for claiming – among other things - that its NatureBee pollen was “made in New Zealand” and from “the hardworking bees of New Zealand’s pristine wilderness”.

In fact, the bees and their pollen were from China.  The judge in the case said “the untrue statements are blatant fabrications and lies.”

“As we say in the video, all the claims businesses make must be accurate, and they must be able to back them up.  That’s especially true if they’re claims that consumers can’t check for themselves,” said Ms Rawlings.

Claims like this earned $526,000 worth of fines for a NZ supplement producer and its shareholder. The bees were from China.

“If you’re going to claim your product or service delivers certain efficiencies, speeds or benefits, then you must have concrete evidence to back that up. And that evidence must be available at the time you first make the claim – not sourced retrospectively.”

In the video, the Commission explains that an unsubstantiated representation means making a claim about your product or service that you don’t have ‘reasonable grounds’ to make. In other words – you can’t back it up.

In 2017 the Commission took its first prosecution for unsubstantiated representations.  A heat pump supplier made claims about the efficiency of some of its heat pumps, but the court found it couldn’t back them up.  It was fined $125,000 for unsubstantiated representations, and $185,000 more for other misleading claims.

“Traders must be able to back up their claim when it is made. Figuring it out later won’t get them out of trouble,” said Ms Rawlings.

The ‘if you can’t back it up, don’t say it’ rule of thumb also applies to false or misleading representations. They are prohibited under the Fair Trading Act and the Commerce Commission has taken plenty of prosecutions for such claims.

“We would much rather educate businesses about their legal obligations than have to take enforcement action, or even prosecute them for Fair Trading Act breaches. So, we strongly urge them to make use of our video and other resources which are available on the Commerce Commission’s website to make sure they comply.”

Learn more at comcom.govt.nz/backitup.

Report finds GCSB in compliance with NZ rights
The Inspector-General has given the GCSB its compliance tick of approval for the fourth year in a row.
Preparing for e-invoicing requirements
The New Zealand and Australian governments are working on a joint approach to create trans-Tasman standards to e-invoicing that’ll make it easier for businesses in both countries work with each other and across the globe
5c more per share: Trade Me bidding war heats up
Another bidder has entered the bidding arena as the potential sale of Trade Me kicks up a notch.
Hootsuite's five social trends marketers should take note of
These trends should keep marketers, customer experience leaders, social media professionals and executives awake at night.
Company-X celebrates ranking on Deloitte's Fast 500 Asia Pacific
Hamilton-based software firm Company-X has landed a spot on Deloitte Technology’s Fast 500 Asia Pacific 2018 ranking - for the second year in a row.
Entrepreneur reactivates business engagement in AU Super funds
10 million workers leave it up to employers to choose their Super fund for them – and the majority of employers are just as passive and unengaged at putting that fund to work.
Tether: The Kiwi startup fighting back against cold, damp homes
“Mould and mildew are the new asbestos. But unlike asbestos, detecting the presence – or conditions that encourage growth – of mould and mildew is nearly impossible."
Capitalising on exponential IT
"Exponential IT must be a way of life, not just an endpoint."