Christmas hamper company Chrisco Hampers has been fined $175,000 for overcharging customers on hamper cancellation fees.
In some cases, Chrisco was charging customers as much as $800 for cancelling their Christmas hamper orders, an investigation by the Commerce Commission found.
In the Manukau District Court today, Chrisco plead guilty to 10 charges under the Fair Trading Act for by misleading customers about terms of cancellation and fees.
Chrisco’s hampers are offered to customers on layby, with payments spread over the year. But the Commerce Commission said Chrisco was recovering more than it should have under the Layby Sales Act, which states customers have the right to cancel their order at any time governs lawful cancellation fees.
The cancellation policy Chrisco operated between 2008 and 2010 saw customers charged 20% of payments already made if they cancelled up to 90 days prior to the final payment date.
If they cancelled within 90 days of the final payment date, that fee was increased to 50% of payments already made. Commerce Commission competition manager Graham Gil said Chrisco customers were being overcharged. “As the fee was worked out as a percentage of payments already made, some customers ended up being charged hundreds of dollars. In a few cases the fee was as much as $800,” said Mr Gill. Chrisco has since reviewed and amended its cancellation policy to be 20% of payments made with a cap of $250.
It also retrospectively refunded about 750 customers a total of $141,735, in line with the amended cancellation policy. Mr Gill said it was difficult to measure the extent of harm caused by Chrisco’s errant policy, because it was hard to measure how many customers would have liked to have cancelled, but didn’t because of the high fees. Customers expect that large companies will have proper and lawful practices in place, said Mr Gill.
“During the investigation Chrisco advised us that it did not have a formal compliance programme in relation to the Fair Trading Act. This was despite the Commission raising concerns with the company about various practices including its cancellation policies.”
Chrisco also pleaded guilty to charges relating to its toys and gifts catalogue, which also breached the Layby Sales Acton cancellation payments, and its ‘Headstart Plan’ – marketed as fully-refundable up to the time an order was placed. However, the Commerce Commission said it was not clear to customers that if they didn’t make their order by a certain time, Chrisco would choose a plan for them. Once that happened, cancellation fees would apply.