Commission’s alpaca case brings total fines to $1.5 million

Issued 23 May 2017
Release No. 108

Commission’s alpaca case brings total fines to $1.5 million

A company and two individuals have been fined a total of nearly $194,000 for claiming that duvets were "pure alpaca wool" or "100% cashmere", when they contained little or no such fibres.

It brings the total fines imposed to just over $1.5 million in 11 cases against companies and individuals who made claims about alpaca, merino wool and cashmere duvets.

"This sort of offending reflects negatively on New Zealand's reputation as a desirable tourism destination," said Antonia Horrocks, the Commission's General Manager, Competition.

"Consumers buy goods like alpaca duvets on trust, because they cannot themselves verify the accuracy of product claims. We refer to claims of this type as credence claims, and ensuring that traders don’t mislead consumers over such claims is a priority for the Commission," said Ms Horrocks.

In the latest case, Princess Wool Co Limited (Princess Wool) pleaded guilty to 14 charges and was fined $159,000. Manager Kevin Stocker was fined $20,187 on six charges and Director Koo Yoarn Lee was fined $14,750 on six charges.

“Claims such as "100% Pure Alpaca" and "Pure Cashmere Duvet" were made on labelling and invoices, and directly to at least one retailer. In fact the duvets contained only minimal alpaca wool and no cashmere," said Ms Horrocks.

The Commission obtained independent testing of five of Princess Wool’s "pure alpaca" duvets. The tests showed that the alpaca content was between 9% and 17%, with the remainder of the content being sheep wool. Three "cashmere" duvets were shown by tests to contain no cashmere and 100% sheep wool.

In sentencing in the Auckland District Court, Judge Gibson noted that the offending “had the effect of punishing honest traders who were unable to compete with Princess Wool’s prices."

Judge Gibson also said that a significant feature in this case was that the offending had occurred “when the industry was on notice that individuals and companies who were offending in this way were likely to face prosecution.”

Princess Wool had twice assured the Commission it would remove labels stating “pure alpaca” and, along with a number of other businesses, it had also received a Compliance Advice Letter about only making truthful 'Made in New Zealand' claims.

Previous Commission cases
Since 2011 the Commission has now prosecuted 11 companies and 11 individuals under the Fair Trading Act, for selling imported alpaca rugs as “Made in New Zealand”, and/or for claiming duvets were predominantly alpaca, merino wool or cashmere when they were not. The Act prohibits misleading and deceptive conduct in trade.

A total of more than $1.5 million in fines has been ordered. See attached table for further details.

Background
Both alpaca and cashmere can command a premium price because of their particular qualities. Alpaca wool is naturally anti-microbial and has a higher resistance to piling, stains and wrinkles.

Cashmere is the fine undercoat hairs from goats, and it must be separated from the coarser outer fibres. It is finer and softer than sheep wool and is also strong and lightweight.

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