Power adverts found to be misleading

Powershop chief executive Ari Sargent

A power company's advertisements exploited the trust of consumers and were likely to mislead or deceive, according to the Advertising Standards Authority.

Powershop launched an advertising campaign in Tauranga late last year directly targeting Trustpower. The advertisements, which ran in the Bay of Plenty Times, claimed that "even when you subtract the rebate, the average Trustpower household still pays more for power than the average Powershop customer".

Trustpower disputed the claims and lodged a complaint with the Advertising Standards Authority.

The authority's ruling upheld Trustpower's complaint.

"The data used to support the comparison was robust and independent, the application of the data and therefore the basis of the comparison was flawed," the decision said.

"The advertisement was likely to mislead consumers as it contained inadequately substantiated, and in some cases inaccurate, claims which created a false overall impression that Powershop was cheaper than Trustpower.

"Further, the panel said the advertisement exploited consumers' trust by not appropriately applying or describing the parameters of the test on which the claims were based."

Trustpower argued it was not clear whether the advert used the figure for the average 2012 or 2013 TECT cheque, and if the 2013 figure had been used Trustpower customers would have actually paid $18 less than Powershop customers.

Powershop said the 2012 figures were the only figures available at the time but the authority ruled it was a "concern" the advertisements did not make clear which year's figure was used.

Powershop's adverts also incorrectly stated which plan Trustpower figures in the Ministry of Business, Innovation and Employment survey, which the claims were based on, referred to.

The authority agreed Powershop did not have the information to correctly model an average Trustpower household, a point which was also disputed.

The authority disagreed the focus of the advert was on Powershop's promise that it would beat the prices offered by any other company and said "as a whole, the advertisement mainly focused on a direct price comparison with Trustpower".

Powershop chief executive Ari Sargent said he apologised for any confusion.

"It's disappointing to be pulled up on a technicality because it was never our intention to mislead customers," he said. "It's clear that the Advertising Standards Authority believe it was an inaccurate statement, and technically it is incorrect. It's disappointing we didn't check that closely."

"The fact that Trustpower even referred it to the ASA is a sign that they don't like us in their patch and makes us more determined to stay here," he said.

A Trustpower spokesman said he would not comment as the company planned to release a statement today.