Unless there is a countervailing customer benefit, retail vouchers which cannot be exchanged for cash or which expire after twelve months are prohibited following a Commerce Commission test case.
The Commission challenges unfair terms in standard form consumer contracts. It took legal action against New Zealand’s largest mobile shop trader, Home Direct Ltd. Home Direct sells clothing, toys, electronics, furniture and whiteware on credit. The High Court was told Home Direct credit contracts allowed it to continue debiting customer accounts after payment of the original debt. The resulting credit balance was converted into a ‘voucher entitlement.’ Vouchers could be used only for Home Direct purchases. They could not be converted to cash. They expired after twelve months. Some $644,000 was forfeited to Home Direct over several years of the scheme’s operation.
Home Direct accepted these terms were unfair. A High Court ruling under the Fair Trading Act was needed to formally declare such terms unfair. This court ruling affects the retail operations of any ‘person,’ not just Home Direct.
Commerce Commission v. Home Direct Ltd – High Court (12.11.19)
19.187