Vehicle dealer 2 Cheap Cars has been fined more than $400,000, with its actions described by the judge as "blatantly untrue", "misleading" and "devious."
It comes after the company pleaded guilty to 10 charges under the Fair Trading Act following an investigation by the Commerce Commission.
Consumer NZ chief executive Sue Chetwin said she was a "bit unsure as to what else they could have done wrong."
"They were saying that their customers had to buy an extended warrantee, and of course, under the Consumer Guarantees Act, you've got lots of protections and often, these extended warrantees are just junk and, as in this case, they were," she said on TVNZ1's Breakfast this morning.
"They weren't really worth the paper they were written on. They were lied to about discounts; they said that there were 84 per cent discounts on some of these cars and really, there was very little, and if there was a discount, it really related to one of those daily vouchers, which were only worth about $300.
"They also pretended that they were going into liquidation and that these cars were selling off cheap, whereas, in fact, that wasn’t the case, so pretty much, you couldn't have done more wrong things than they did."
Extended warrantees are "extra protection" for items already bought by customers and "generally, you don't need them, and we certainly would advise consumers against ever buying them," she explained.
"They said that you had to get your vehicle repaired by 2 Cheap Cars, and of course, under the Consumer Guarantees Act, that is not the case; and also that you wouldn't get other things if you didn't take these warrantees, that you had no protection, and of course, you do have the full protection of the act, which says, essentially, that the cars have got to do what they're meant to do and probably have warrants and be registered."
Ms Chetwin agreed with the judge's comments, adding that "car dealers have a bad reputation for a reason."
"This 2 Cheap Cars company is probably at the worst end, so really good that the Commerce Commission has had this win in the district court, but question mark as to how many other car dealers are out there that are promoting these sorts of very poor behaviours."
She called the penalty handed down to the company "a pretty tough fine", adding, "I guess they could have gone further, but $438,000 – I think that's a pretty strong sign to 2 Cheap Cars and hopefully, to any others who are out there doing the same thing."
She noted that even if consumers had looked at the fine print before signing, it "would have been wrong."
"This is a case where they had deliberately set out to deceive consumers by giving them completely wrong information, so I think even if you were the best consumer – and I guess you would have to have known what your rights were under the Consumer Guarantees Act and known that were breaches of the Free Trading Act here because they were being misleading – it's a pretty educated consumer that would know that."
Ms Chetwin said she would advise people looking to buy a vehicle should try and find a reputable dealer, and to "be weary of extended warrantees."
"Make sure that you do go to a dealer and if there is such a thing as a reputable dealer, try and find them, but also be weary of extended warrantees. Generally, with cars, they are what we would call junk and you don't need one, so if you've got a car dealer that’s trying to sell you a warrantee, alarm bells should be ringing."