The TV Shop also systematically prevented more low rating reviews from being published on its own website.
The TV Shop also misrepresented consumers’ rights to refunds or other remedies and made misleading claims about “free” or “bonus items”.
The TV Shop is the company behind well-known brands like Thin Lizzy and Transforma Ladder. Its products are marketed on television infomercials beamed into the homes of Kiwi consumers.
In the Court’s judgment, The TV Shop was convicted of 13 charges for breaches of the Fair Trading Act spanning a period of nearly four years.
The Court found The TV Shop breached the Fair Trading Act by misleading consumers about the popularity and quality of goods when, at its behest and sometimes for reward, staff members posted reviews on various online review platforms about products without disclosing their affiliation to the business, and that they were not a “real shopper”.
In some cases the staff member concerned had not even used the product in question but gave it a positive review. The evidence also indicated The TV Shop requested employees ask friends and family to leave reviews.
The company also methodically removed some low-rating reviews on its own website. When customers posted a one, two or three star rating, their review was not published unless they responded to a follow up email from the company.
Commerce Commission Deputy Chair Anne Callinan says: “The law is very clear – businesses must not mislead consumers through reviews that are not what they seem.”
“When people are looking to buy a product, they will often read online reviews to help them make an informed decision. Consumers should be able to trust that the reviews posted are genuine,” she says.
“They should also be able to trust that genuine customer reviews are not excluded in order to positively skew product ratings”.
The Court also found that The TV Shop systematically denied customers their rights under the Consumer Guarantees Act if something went wrong with a product they had purchased.
It did so through policies and instructions to call centre staff, which suggested to consumers that they did not have any other rights to refunds or remedies outside of The TV Shop’s ‘30-day Money Back Guarantee scheme’ or ‘risk-free trial’.
In fact, those who had purchased the product may have had rights and remedies, such as a refund where products were defective.
There were also misleading representations about “free” or “bonus” items. The TV Shop’s popular Air Roaster Pro was advertised continuously between 2018 and 2021 as having an accompanying accessory pack, which was described as a “free” or “bonus” item, or “special offer”. But the reality was that this product was always sold with the accessory pack – customers were not getting anything extra.
Judge Sellars KC said the relevance of a number of staff reviews, identified by the Commission during the case, was “to demonstrate that the posting of undisclosed staff reviews was not an anomaly but the result of a concerted effort by BDL”.
Judge Sellars KC also accepted an expert witnesses’ opinion that “BDL’s review omission systematically lowered the availability of negative information about its products to consumers”.
Ms Callinan says customers should be able to trust reviews are legitimate and accurate, that they aren’t misled about their rights as a purchaser and that apparent special offers are what they seem.
Judge Sellars KC also pointed to a “pattern of BDL employees representing to aggrieved customers that its terms and conditions and company policies take precedence over New Zealand consumer law”.
“Such broad denials of liability are of concern,” she said.
Ms Callinan says her message to businesses is simple – “be honest with your customers.”
The Commission has previously successfully prosecuted The TV Shop twice since 2015.
In 2022, The TV Shop was fined $123,500 after failing to comply with extended warranty disclosure requirements, and in 2015 the business was fined $153,000 for misrepresentations that a ladder being sold or advertised had a certification when it did not.
The matter will now progress to a penalty hearing.