Heat pump company fined for bogus refrigerant top-ups

NEW ZEALAND: A servicing company has been fined NZ$75,000 (US$50,000) for falsely claiming that customers required refrigerant top-ups.

Ocean Contracting Ltd, based on New Zealand’s south island, pleaded guilty to 10 charges of making false or misleading representations to customers in Otago and Southland, following a New Zealand Commerce Commission investigation.

The company was said to have approached customers and offered to service their heat pumps. During that service inspection it advised that their heat pumps were leaking refrigerant gas, that it would cost between NZ$180 (US$120.00) and NZ$400 (US$265.00) to top-up the refrigerant gas, and that the heat pump would stop functioning correctly if a top-up was not performed. Some customers were said to have been shown a gauge purporting to record low gas pressure.

According to the Commerce Commission, none of the complainants’ heat pumps required a refrigerant top-up. In fact, many of the complainants’ heat pumps were fully functional. Where heat pumps had problems, they were not leaking refrigerant gas, the Commission said. 

It was also revealed that during the Commission’s investigation an Ocean Contracting technician admitted falsely diagnosing refrigerant leaks.

In sentencing notes Judge Neave in the Christchurch District Court said the situation was created by the company’s “flawed policies” and for which it must accept responsibility.

For the Commission, chair Anna Rawlings said, “Any business which cold calls or door knocks for customers should note that Ocean Contracting was held liable for the representations made by its employee because its technician made the false or misleading representations within the scope of his employment and as a representative of the company. Staff should be properly trained and systems should be in place to ensure that they do not mislead customers about the need for any services or about the kind of services actually delivered.”

All 10 complainants were from Otago or Southland and received cold calls by telephone from Ocean Contracting in 2016 or 2017, later followed by a visit to service their heat pumps. Most complainants were retired.

Judge Neave revealed that a number of the complainants were “financially vulnerable” and that paying for the top-up procedure was a significant expense for them.

Ms Rawlings said, “The victims in this offending had no way of knowing whether or not the claims made about servicing their heat pumps were accurate. They relied on the expertise of Ocean Contracting and they were misled into paying Ocean Contracting for services they did not need. Several complainants later incurred more unnecessary costs because they hired another company to check the claims made by Ocean Contracting.”

Ocean Contracting agreed to pay reparation to the victims identified in the charging documents for the expenses they incurred as a result of the conduct.