Brakes put on $500,000 holiday scam

A holiday  accommodation scam that has taken about $500,000 from 2800 people has been stopped after a Commerce Commission investigation.

The High Court at Auckland has issued an interim injunction, sought by the commission, ordering Discount Premium Holidays to stop breaching the Fair Trading Act and to disclose certain information when selling to New Zealand customers.

The injunction also covers Discount Premium Holidays' Australian affiliated companies, Key 2 Communications and 27 x 7 Direct, and the director of all three companies, Devang Parikh.

The commission is to file criminal proceedings against the companies and Mr Parikh and seek orders for refunds to customers.

Telemarketers based in Melbourne had been selling discount travel memberships and vouchers for between A$109 ($NZ125) and A$209 since July last year.

But the commission's investigation found that the vouchers and memberships were extremely difficult to redeem at New Zealand accommodation providers, effectively making them worthless.

Commission chairwoman Paula Rebstock said the breaches were at the serious end of the scale.

"Telemarketers can be very persuasive, but when they are persuasive as well as misleading, consumers are often caught out in deals that are not at all what they should be," she said.

Customers were told the vouchers were redeemable at accommodation providers in New Zealand and around the world.

In fact, Discount Premium Holidays had no authority to market the vouchers and it was unlikely they could be redeemed.

Customers were also told that they had won free accommodation, but those vouchers came with onerous conditions attached before they could be redeemed.

- © Fairfax NZ News