The vehicle sales company 2 Cheap Cars is facing 10 charges under the Fair Trading Act.
The charges follow a Commerce Commission investigation and relate to 2 Cheap's "must liquidate" and "84 percent off" advertising claims, as well its use of "warranty waiver" documents.
The investigation began in November 2017, after the Commission received a number of complaints.
In advertising for sales in September and October 2017, 2 Cheap made statements including, "2 Cheap Cars is in hot water, it must liquidate immediately," and "a massive price drop this weekend".
The Commission alleges the advertising was misleading as to the price of the cars, because it suggested that many vehicles would be significantly discounted, and there would be no further opportunity to purchase from 2 Cheap Cars.
Most of the 710 vehicles then for sale nationwide were not discounted at all or had discounts of as little as $5, and 2 Cheap Cars was not in, or going into, liquidation, the Commission said.
In January 2017, 2 Cheap Cars' newspaper advertising included the phrase "84 percent off".
The Commission alleges this was misleading, because the discount was off the price of a voucher, and not the price of the cars.
Further, between January 2014 and December 2017, 2 Cheap Cars frequently asked car buyers to sign a "warranty waiver" document if they chose not to purchase an extended warranty.
The waiver included statements such as, "the vehicle you are purchasing does not include a warranty of any kind", "[If] you choose not to purchase the indicated warranty at this time, you must sign this waiver", and "I do understand that 2 Cheap Cars will comply with the Consumer Guarantees Act. I also understand that I am, and would prefer to be, solely responsible for any repair bills."
The Commission alleges the waiver documents misrepresented consumers' rights under the Consumer Guarantees Act.
It's estimated more than 20,000 warranty waivers were signed. 2 Cheap Cars stopped using the waivers in December 2017, after they were notified of the Commerce Commission investigation.
The matter is now before the courts, so the Commission won't be commenting further.
In a statement, 2 Cheap Cars said while it was disappointed the Commission had decided to take court action, it was committed to cooperating fully.
Because the matter is now before the courts, the company can't make any further comment.