Hospitality company fined for Fair Trading Act breach

Hospitality company fined for Fair Trading Act breach

Venkat Raman
Auckland, December 24, 2019

Screenshot of Bachcare Limited Website

A New Zealand based hospitality company has been ordered by the Auckland District Court to pay fines totalling 117,000 on two charges of breaching the Fair Trading Act.

The judgement was given by presiding Judge Ajit Swaran Singh at the Auckland District Court on December 17, 2019.

“On each charge, Bachcare Limited is fined $58,500, totalling $117,000. In respect of each charge, Bachcare will also pay $130 court costs, totalling $260,” he said.

Bachcare Limited pleaded guilty to two representative charges under sections 11 and 40 (1) of the Fair Trading Act 10986 (FTA).

The Commerce Commission brought charges against the company saying, “its conduct, which was liable to mislead the public as to the characteristics, or suitability for purpose, of services. Bachcare’s conduct created an artificially positive impression of holiday accommodation, marketed on its website.”

According to the Commerce Commission, the offending occurred over a period of 16 months, from June 1, 2017 to September 28, 2018.

About Bachcare

Incorporated in 2003, Bachcare Limited is a nationwide holiday rental and accommodation company, employing approximately 40 full-time staff.

As at mid-2018, the number of annual bookings was approximately 25,000.

The Company estimated that by number of bookings, it is the fourth largest accommodation booking platform operating in the New Zealand market.

It also provides management services through 85 to 90 contractors nationwide.

The Commerce Commission alleged that Bachcare removed negative comments from some consumer reviews before publishing them on its website and did not publish any reviews to which consumers had given a star rating of less than 3.5 out of 5.

“In doing so, Bachcare engaged in conduct that was liable to mislead consumers by creating artificially positive impressions about certain properties,” the Commission said.

Judge’s comments

In his judgement, Judge Singh observed that unlike some cases referred to counsel, the extent of offending was limited to 22% of the properties involved in rating inflation and 3.4% of the reviews which were edited. Marketing was limited to the website. In some instances, marketing included various medium such as online, television and pamphlets.

“Relative to some cases referred to in submissions, whilst Bachcare is a sizeable company, it is not in the same league as some of the much bigger companies. Whilst the harm cannot be quantified, the offending conduct infringed the purposes of FTA. It compromised the interests of the consumers, fair competition and an environment in which consumers and businesses participate confidently,” he said.

Judge Singh said that in his assessment, the level of carelessness was moderate to high for the following reasons (a) Lack of procedure and processes for compliance with FTA (b)

Failure to train and supervise staff involved in marketing (c) Whilst acknowledging that Bachcare fully cooperated with the investigations, it did not act promptly enough to remove the offending ratings and reviews.

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