Used car dealer 2 Cheaps Cars has been fined nearly half a million dollars and slammed for using "blatantly untrue and misleading" documents, and ads that were "tantamount to devious".
2 Cheap Cars has 14 dealerships around New Zealand, and the directors are Eugene Hamilton Williams and Yusuke Sena.
In a release this morning, the Commerce Commission said that the company was sentenced at Auckland District Court on July 8, and ordered to pay a fine of $438,000.
The company had earlier pleaded guilty to ten charges brought under the Fair Trading Act after an investigation of their practices was opened by the Commerce Commission in 2017.
The company had routinely asked customers to sign 'warranty waiver' forms if they chose not to purchase an extended warranty.
The forms included the signatories declaring that "I am, and would prefer to be, solely responsible for any repair bills".
This contravenes the Consumer Guarantees Act, under which motor vehicle traders are required to remedy problems with a vehicle they've sold up to a certain time period.
In sentencing, Judge Robert Ronayne said the fine need to be significant for a company with annual profits of more than $3 million.
He said their use of the 'warranty waiver' forms was "blatantly untrue and misleading" and said "this must have been designed to encourage (unlawfully) the purchase of insurance product".
The Commission estimated that consumers signed more than 20,000 of the forms before the company stopped using them in 2017, after the Commission began investigating them.
Commission Chair Anna Rawling said that "2 Cheap Cars misrepresented consumers' rights under the CGA.
"It should not have told customers they had no warranty of any kind and it should not have attempted to limit its liability for repairs in the way that it did.
"Conduct such as this puts pressure on customers to buy an extended warranty and deters them from returning to the seller for help if something goes wrong, even though they may have rights under the CGA."
The company was also sentenced over advertisements it placed for sales on September 30 and October 1 in 2017.
The called it a "Japanese imported vehicles liquidation sale" and said that "2 Cheap Cars is in hot water, it must liquidate immediately" - however, the company was not in, or going into, liquidation at all.
Judge Ronayne said this advertising was "deliberately misleading rather than simply careless" and "behaviour which was a complete departure from the truth".
The company also misled customers by using the term "84 per cent off" during a sale, when that figure actually related to the cost of a Grabone voucher entitling them to a discount on a car, not on the price of the cars themselves.
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