Water-filter company Love Springs and its director, Phillip Smart, have been fined a total of $555,000 in the Auckland District Court for making false claims about the safety of tap water.
Love Springs' door-to-door sales staff claimed tap water could cause cancer, birth defects and miscarriages and was dangerous to people's health. The claims breached the Fair Trading Act.
The charges were brought by the Commerce Commission.
The commission said Love Springs, aided and encouraged by Smart, trained door-to-door sales staff to sell the filters in 2009-2010, using deliberate marketing tactics that took advantage of people's fears about their health.
Love Springs targeted towns and cities throughout the North Island.
More than 6000 water filters were sold during the period, at $1600 each. The commission obtained an injunction to stop the conduct in April 2010.
Smart had previously been convicted of similar offending in Australia.
Judge Russell Collins found that Smart was "the architect" of the approach of using "scare tactics around the fitness of New Zealand tap water".
Love Springs' marketing claims were utterly false, he said.
Love Springs was fined $355,000 and Smart $200,000.
The commissions head of investigations, Ritchie Hutton, said: "This was nasty and cynical offending which deserved the significant penalties imposed."
The offending had caused significant harm to the public, Hutton said.
"The company targeted vulnerable people in their homes by scaring them with false information about the safety of New Zealand's reticulated water network, and then charged them $1600 for something that comes out of the tap.
"Scientific evidence shows that the dire health warnings were completely false."
While Love Springs pleaded guilty to the charges in June 2012 its sentencing was delayed as Smart defended the charges brought against him.
He was convicted on all charges on October 4.
- Fairfax Media