Andrew Taylor pleaded guilty to four charges related to misleading customers, accepting payments and failing to respond to a statutory notice.
The Commerce Commission brought the charges forward under the Fair Trading Act and Crimes Act.
For the first seven months of 2013, Taylor was the owner and director of the online store.
He misled consumers regarding the prices, stock availability, delivery times and provision of refunds.
The company was struck off, but Taylor continued to trade under the Global SoundTrade name until his websites were deactivated in January 2014.
There were 94 complaints made to the Commerce Commission about purchases made on his Australian and New Zealand websites.
Of that number, only four complainants got the goods they paid for.
Seven received a refund. The other 84 didn’t get any goods or refund.
Commissioner Anna Rawlings says consumers were harmed when they bought from the website, believing the goods they ordered and paid for would be delivered.
“Mr Taylor’s offending started as a series of false claims about the purchase and delivery of goods,” Rawlings says.
“But this progressed to fraud when he began accepting purchases with no intention of fulfilling customer orders.”
She says from March 2013 to October 2013 he received around $150,000 from New Zealand customers, but less than $8000 could be reasonably attributed to supplier payments.
“Mr Taylor ultimately admitted that he had been spending money received from consumers on his own lifestyle even though he was not providing them the goods that they had purchased.”
The Commerce Commission’s investigation found that despite advertising that the 5000 to 8000 products on his website were in stock and ready to ship, Taylor didn’t have any more than 40 or 50 products in stock at any one time.
Instead, he’d order the product from an overseas supplier once a customer’s payment had been made.
This made it impossible for customers to get their goods within the seven to 14 day period advertised on the sites.
He also inflated prices on the site to make them seem attractive to consumers.
A Roland TD-15KV Electronic Kit was advertised at a list price of $6499, when the actual list price set by the New Zealand distributer was $2000 cheaper at $4699.
GlobalSoundTrade Ltd has gone by other names previously.
It used to go by NZSounds and MusicThingz, but then a scathing Fair Go report prompted Taylor to change the name of the business and shake off the bad press.
Rawlings warned other online retailers that the Commerce Commission will not hesitate to crack down on them.
“Online shopping is now a routine part of life for New Zealanders and the Commission will continue to target businesses that are causing harm,” Rawlings says.
“Online traders need to ensure they can fulfill any orders they take within the time frames promised.”