Water-filter company fined for using scare tactics
Love Springs and director Phillip John Smart have been fined a total of $555,000 in the Auckland District Court for breaches of the Fair Trading Act in relation to the door-to-door sales of water filters.
The water filters were sold from 2009 to 2010 by sales staff who claimed local drinking water could cause cancer, birth defects, miscarriages and other health problems. Led by Mr Smart, the company trained door-to-door sales staff to sell the filters using fear sales tactics.
Love Springs targeted towns and cities throughout the North Island. More than 6000 water filters, at $1600 each, were sold during the period covered by the charges.
Mr Smart had previously been convicted of similar offences in Australia.
Judge Russell Collins found that Mr Smart was “the architect” of the approach of using “scare tactics around the fitness of New Zealand tap water.” He stated that Love Springs’ marketing claims were false.
Judge Collins ordered fines of $355,000 for Love Springs and $200,000 for Mr Smart.
The commission originally obtained an injunction to stop the conduct in April 2010, says Ritchie Hutton, Commerce Commission head of investigations, in a statement.
“This offending caused significant harm to the public” Mr Hutton says.
“The company targeted vulnerable people in their homes by scaring them with false information about the safety of New Zealand’s reticulated water network, and then charging them $1,600 for something that comes out of the tap."
Love Springs pleaded guilty to the charges in June 2012. Mr Smart was convicted in October and sentenced late yesterday afternoon.