The District Court has ordered Brand Developers Ltd,
trading as The TV Shop, to pay a $1,104,000 penalty for a
range of conduct, including company staff members posting
positive product reviews without disclosing their
affiliation with the business.
In some cases, The TV
Shop’s employees also posted positive reviews, that would
have misled consumers, despite not using the product in
question. The Commission also uncovered evidence the
company, which is behind well-known brands such as Thin
Lizzy and Transforma Ladder, asked friends and family to
leave reviews.
In addition, The TV Shop systematically
removed some negative reviews from its website – reviews
with one, two or three stars would not be published unless
the customer responded to a follow up email from the
company. No low rating reviews were published at all for a
period during 2020.
Commerce Commission Deputy Chair
Anne Callinan says online reviews are increasingly relied on
by Kiwis looking to buy products and it is unacceptable to
post or manipulate them in a way that misleads
people.
“When you have staff post reviews without
disclosing their affiliation, or when you remove negative
reviews, you are effectively tricking potential
customers,” Ms Callinan says.
“My message to
businesses is simple – don’t pull the wool over peoples’
eyes.
“Kiwis should be able to trust online reviews
are genuine and free of manipulation.”
In her
sentencing decision, Judge Belinda Sellars KC called The TV
Shop’s offending in relation to online reviews
“deliberate and systematic”.
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Its managers and
executive were aware of, and at times directed, the conduct,
she added.
“It is clear from the evidence that BDL
made concerted and repeated efforts to improve the online
rating and reviews of its products and thereby deliberately
mislead consumers,” Judge Sellars found.
“The
methods that staff were instructed to follow for posting
reviews were designed to circumvent Product Review and
Google’s processes to stop non independent
reviews.”
Earlier, in a December judgment, the
District Court also found The TV Shop systematically misled
customers about their rights under the Consumer Guarantees
Act.
The company had policies and instructions in
place that meant call centre staff suggested customers had
no rights to refunds or remedies beyond a ‘30-day Money
Back Guarantee scheme’ or ‘risk-free trial’ if
customers thought products were broken, faulty or
mis-advertised.
At sentencing, Judge Sellars KC found:
“Representations made by a business about the CGA are
extremely important to consumers given the protective nature
of the legislation.”
In its December judgment
(https://www.comcom.govt.nz/news-and-media/news-and-events/2025/district-court-finds-the-tv-shop-staff-wrote-positive-customer-reviews-misled-consumers/),
the court also found representations about “free” or
“bonus” items were misleading.
The TV Shop’s
popular Air Roaster Pro product was advertised for three
years as including an accessory pack, described as a
“free” or “bonus” item, or “special
offer”.
In reality, the product was always sold with
the accessory pack and customers were not getting anything
extra.
A copy of Judge Sellars KC’s sentencing
decision is available on the Commission’s case register
(https://www.comcom.govt.nz/case-register/case-register-entries/brand-developers-limited-ta-tv-shop2/?section=documents).
Separately,
in 2022 The TV Shop was fined $123,500 after failing to
comply with extended warranty disclosure requirements
(https://www.comcom.govt.nz/news-and-media/news-and-events/2022/tv-shop-fined-for-extended-warranties-disclosure-failures/).
In 2015, the business was fined $153,000 for
misrepresentations that a ladder being sold or advertised
had a certification when it did not
(https://www.comcom.govt.nz/news-and-media/news-and-events/2015/commission-prosecutes-business-over-unsafe-transforma-ladders/).
The
Commission filed further proceedings against The TV Shop in
February, alleging it engaged in unconscionable conduct by
utilising exploitative and misleading practices when selling
high value products to consumers
(https://www.comcom.govt.nz/news-and-media/news-and-events/2026/commission-takes-on-first-unconscionable-conduct-cases/).
Background
Online
reviews
Online reviews provide an increasingly
important source of information for consumers contemplating
the purchase of goods and services.
Reviews must be
genuine and presented in a way that does not mislead the
reader about the overall message intended by the
reviewer.
The Commission has published guidance to
assist businesses to meet their legal obligations when they
collect or publish customer reviews
(https://www.comcom.govt.nz/business/dealing-with-typical-situations/ensuring-customers-get-a-complete-picture-of-your-online-reviews/).
Rights
under Consumer Guarantees Act
Under the Consumer
Guarantees Act, products are guaranteed to be fit for
purpose and of acceptable quality. These guarantees are
implied by law. They do not need to be written into a
consumer contract and they apply in addition to any written
warranty provided by a manufacturer or retailer.
In
addition, manufacturers and retailers cannot contract out of
the guarantees that apply to them when goods are ordinarily
acquired for domestic or household use, regardless of the
terms and conditions which a business has in place. It is an
offence under the Fair Trading Act to mislead consumers
about their rights, including their rights under the
Consumer Guarantees Act.
There is more information
about consumers’ rights under the Consumer Guarantees Act
on the Commission’s website.
Online sales
practices
Consumers increasingly shop online and rely
on claims businesses make on their website about goods and
services. In many cases, consumers cannot establish for
themselves if these claims are accurate. Claims about the
availability or popularity of goods or services can
influence a consumer to make a purchase. As with all claims
that businesses make, claims made online must be clear,
accurate and unambiguous and businesses must be able to
substantiate them – back them up.
The Commission has
published guidance to assist businesses to meet their legal
obligations when they carry out online sales practices.
There is more information on the Commission’s website –
https://www.comcom.govt.nz/business/dealing-with-typical-situations/online-sales-practices/.