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Companies fined for tourist souvenir scam

Published: 11:32AM Tuesday April 02, 2013 Source: ONE News

  • New Zealand coat of arms (Source: ONE News)
    New Zealand coat of arms - Source: ONE News

A scam fleecing tourists with fake souvenirs has led to two men and two companies being convicted and fined more than $250,000.

Tourists from China, Korea and Taiwan were the unwitting victims of the scam, which saw organised bus tours taken to several premises in Rotorua and Auckland and given misleading sales pitches over products they were told were made in New Zealand.

The items included alpaca rugs which were actually imported, and merino or alpaca duvets with fake wool contents.

The Commerce Commission said the tourists were charged more for the products than they were worth, due to the fake claims made about them.

"New Zealand has a reputation for producing premium wool products," Commerce Commission Chairman Dr Mark Berry said.

"Tourists are prepared to pay significantly more for these products than for the same items produced elsewhere.

"To sell items as New Zealand made when they are not, or knowingly label and sell items as 100% alpaca or merino wool when they are not, is deliberately misleading buyers."

Associate Minister of Tourism Chris Tremain said the investigation shows New Zealand takes a tough stance against the exploitation of tourists.

"We strive to ensure that our visitors are offered the best possible experience of New Zealand, including their interactions with our retail sector," he said.

"Breaches against tourists are relatively rare when considered across the wider tourism industry, but they will not be tolerated."

Companies, individuals fined

During sentencing, Judge Nevin Dawson said the defendants demonstrated a "large degree of wilfulness and carelessness in the misrepresentations [they were] deliberate and systematic."

He also said the defendants' conduct "undermined fair competition in the market and unfairly disadvantaged other traders."

Top Sky Holdings was charged with 12 breaches of the Fair Trading and fined $140,000. Its managing consultant Haidong Chen was also charged with 28 breaches of the act and charged $24,500.

The company offered alpaca rugs made in Peru for sale in its Rotorua store, which had been re-labelled: 'Alpaca New Zealand, 100% Baby Alpaca, proudly made in New Zealand by Alpaca New Zealand.'

The rugs were priced between $4,000 and $8,000, when Peruvian rugs were sold elsewhere for no more than $1,600.

It also made and sold duvets it claimed were 100% alpaca fibre, where the actual content was more like 20%

The directors of the company admitted to the Commerce Commission that they knew the representations being made by sales staff were false.

Kiwi Wool Limited was also charged with 18 breaches of the Fair Trading Act, and fined $84,000. The Managing Director Jinming Chen faced 18 charges and was fined $10,500.

The company also made the duvets it stated contained "100%" pure alpaca or merino wool, when the reality was more like 20% or none at all.

The duvets cost $70 to make and tourists were charged up to $1,000.

The directors of the company also admitted to the Commerce Commission that they knew the representations made about the duvets were false.