February 01, 2012
A CHRISTMAS hamper company that overcharged its New Zealand customers who cancelled their hampers before their last payment has been fined $NZ175,000 ($137,125.84).
Chrisco Hampers Ltd admitted 10 charges in Manukau District Court of breaching the Fair Trading Act by misleading customers about their cancellation rights under the Layby Sales Act between 2008 and 2010.
The act gives customers the right to cancel at any time until the last payment, and governs what sellers can charge customers when they cancel.
Chrisco, which supplies products on layby to customers for Christmas with payments spread over the year, charged customers 20 per cent of payments already made if they cancelled up to 90 days prior to the final payment date, and 50 per cent if it was within the final 90 days.
“Chrisco’s cancellation policy meant that the company recovered more than it should have under the Layby Sales Act, so customers were overcharged,” Commerce Commission competition manager Graham Gill said.
“As the fee was worked out as a percentage of payments already made, some customers ended up being charged hundreds of dollars. In a few cases the fee was as much as $800.”
Chrisco changed its cancellation policy following the commission’s investigation to be 20 per cent of payments made with a cap of $NZ250, and refunded a total of $NZ141,735 to about 750 customers.
“We are pleased that customers who were overcharged have been refunded. However, it is difficult to measure the extent of harm caused by Chrisco’s conduct,” Mr Gill said.
“In addition to those customers who cancelled and were charged fees, there were customers who may have been put off cancelling when faced with the prospect of a large fee.”
Chrisco also admitted breaching the Layby Sales Act over two other parts of its business.