Heat pump servicing company fined $75,000 over scam

A heat pump servicing company which scammed customers in Otago and Southland has been fined $75,000 after a Commerce Commission investigation.

Ocean Contracting earlier pleaded guilty to 10 charges under the Fair Trading Act for making false or misleading representations to 10 customers across the South.

The Commerce Commission said the company approached customers and offered to service their heat pumps.

During service inspections it advised people their heat pumps were leaking refrigerant gas and it would cost between $180 and $400 to “top up” the refrigerant gas.

Customers were warned their heat pump would stop functioning correctly if a “top up” was not performed. Some customers were shown a gauge purporting to record low gas pressure.

In fact, none of the complainants’ heat pumps required a refrigerant top-up. Many of the complainants’ heat pumps were fully functional.

Where heat pumps had problems, they were not leaking refrigerant gas. During the commission’s investigation an Ocean Contracting technician admitted falsely diagnosing refrigerant leaks.

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

Commission chairwoman Anna Rawlings said any business which cold-called or door-knocked for customers should note Ocean Contracting was held liable for representations made by its staff member.

This was 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 said “a number of the complainants are financially vulnerable. Paying for the top-up procedure was a significant expense for them.”

Ms Rawlings said the victims had no way of knowing whether 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 also agreed to pay reparation to the victims identified in the charging documents for the expenses they incurred as a result of the conduct.