Adfit Membership Services Ltd and Television New Zealand Ltd - 2004-020
- Joanne Morris (Chair)
- Diane Musgrave
- Tapu Misa
- R Bryant
- Adfit Membership Services Ltd
BroadcasterTelevision New Zealand Ltd
Fair Go – comments about complainant which collects membership fees for fitness centres – complaint that item unbalanced, inaccurate and unfair
Standard 4 – subsumed under Standard 6
Standard 5 – subsumed under Standard 6
Standard 6 – one aspect of discussion of credit contracts omitted relevant information provided by complainant – unfair – uphold
Broadcast of statement
This headnote does not form part of the decision
 Some of the activities of Adfit Membership Services Ltd, a company which collects membership fees for more than 100 fitness centres, were investigated in an item on Fair Go, broadcast on TV One at 7.30pm on 10 September 2003. Fair Go is a consumer rights programme which looks at issues from the consumers' perspective.
 K G Morrison, Adfit Membership Services Ltd's general manager, complained on behalf of Adfit to Television New Zealand Ltd, the broadcaster, that the item breached the standards relating to balance, fairness and accuracy, and he sought an on-air apology.
 In response, TVNZ maintained that the item was well-balanced, accurate and had treated the company fairly. It denied to uphold the complaint.
 Dissatisfied with TVNZ's decision and on behalf of the complainant, Mr Morrison referred the complaint to the Broadcasting Standards Authority under s.8(1)(a) of the Broadcasting Act 1989.
For the reasons below, the Authority upholds one aspect of the complaint.
 The members of the Authority have viewed a video of the programme complained about and have read the correspondence which is listed in the Appendix. The Authority determines the complaint without a formal hearing.
 Fair Go is a long-running consumer rights programme which, TVNZ explained, looks into issues which arise when customers are dissatisfied with the treatment received from providers.
 In regard to the item complained about, TVNZ reported that the complainant company collected membership fees for more than 100 fitness centres in New Zealand and the item had looked at two specific cases. One involved a 15 year-old girl (Rosemary King) who was held to her contract although she was under age when she signed it. The other instance involved a person (Irina Orlovskaya) for whom English was a second language and who wanted to be released from the contract as she said that she had been told, when she had signed up for membership, it was only for a trial membership rather than full membership.
 The General Manager of Adfit Membership Services Ltd (Adfit), Mr K G Morrison, complained that the item breached the standards relating to balance, fairness and accuracy. He focused on three aspects of the item.
 First, he referred to the segment dealing with Rosemary King and pointed to four aspects where he considered the item was unbalanced and unfair.
 Secondly, the segment relating to Irina Orlovskaya was also unbalanced and unfair as the item excluded his explanation about the simplicity of the contract.
 Thirdly, he maintained that the comment in the item from the Ministry of Consumer Affairs that Adfit's contracts were credit contracts was inaccurate, unbalanced and unfair. He also maintained that the legal opinion, on which the Ministry relied and a copy of which had been provided both to Adfit and Fair Go , was incorrect. He wrote:
The opinion is incorrect in a number of aspects, but that aside, it deals with only 1 specific contract that the Ministry was looking at. It is an enormous leap from having an opinion that 1 specific Adfit contract is a credit contract to all Adfit contracts are credit contracts which was clearly the impression Fair Go presented. This is particularly the case given that Fair Go were specifically informed that in the cases of a significant number of Adfit contracts, the sum of the instalments was not greater than the cash price and so they could not possibly be credit contracts.
 Moreover, he advised that Adfit had been successful, as Fair Go and the Ministry were advised, in the Disputes Tribunal and the District Court where the credit contract issue had been raised. Specifically, he stated, the item was inaccurate when it suggested that legal proceedings were needed to resolve the issue.
 The company concluded:
In summary we were therefore not surprised, but certainly dismayed at the gutter, tabloid journalism shown by Fair Go in this instance. I would add that this is not the first time we have been a victim of this. In an item on promotions company, Lifeforce, earlier this year, Fair Go while specifically not mentioning the name Adfit, showed close ups of our contracts and letters with our name shown clearly thereby creating the impression that there was some link between Adfit and Lifeforce. This is not the case.
 TVNZ assessed the complaint under Standards 4, 5 and 6 of the Free-to-Air Television Code of Broadcasting Practice. They read:
Standard 4 Balance
In the preparation and presentation of news, current affairs and factual programmes, broadcasters are responsible for maintaining standards consistent with the principle that when controversial issues of public importance are discussed, reasonable efforts are made, or reasonable opportunities are given, to present significant points of view either in the same programme or in other programmes within the period of current interest.
Standard 5 Accuracy
News, current affairs and other factual programmes must be truthful and accurate on points of fact, and be impartial and objective at all times.
Standard 6 Fairness
In the preparation and presentation of programmes, broadcasters are required to deal justly and fairly with any person or organisation taking part or referred to.
Broadcaster's Response to the Complainant
 Explaining that some of the complainant company's practices merited examination by Fair Go , TVNZ dealt in detail with each of the points raised.
 Dealing first with the matters raised in regard to Rosemary King, TVNZ looked at the contents of the item, the complaint and the item's conclusion. TVNZ acknowledged that there were differences of opinion on some matters, including whether Rosemary's mother had been present when Rosemary signed the contract, but maintained that the item did not breach the standard when it questioned the status of a contract signed by Rosemary King while still a minor.
 Turning to the aspects which referred to Irina Orlovskaya, TVNZ said the issue was not the contract, but how and when the contract could be cancelled. It added that Mr Morrison had been asked three times whether Ms Orlovskaya could cancel the contract in the circumstances and the reply had been “No”. TVNZ maintained that viewers were fairly advised of the issue.
 In regard to the credit contract issue, TVNZ said that the item contained the Ministry's advice for people to take care when signing contracts. It pointed out that Adfit had refused to provide Fair Go with the opinion it said it had that Adfit's contracts were not credit contracts. TVNZ added:
While reporting your decision, the [complaints] committee found it strange that you should accuse Fair Go of treating you unfairly when you did not supply materials which might have supported your argument.
 As for Adfit's claim that the item was inaccurate when not reporting the result of cases, TVNZ wrote:
[Fair Go] always ends items such as this one with advice to consumers arising from the issue or issues which have been discussed. It seemed to the committee that the focus here was always on how and when an Adfit contract such as those involving the Kings and Ms Orlovskaya can be cancelled. All the closing line indicated was that once Fair Go learns of a relevant case going to the Disputes Tribunal or the Courts it will pass the information on to its viewers.
 In conclusion, TVNZ described the item as well-balanced as Adfit had been given the opportunity to respond at length to the salient issues. It did not consider the item in any way inaccurate, and believed that Adfit had been treated fairly. It declined to uphold the complaint.
Referral to the Authority
 In the referral, Mr Morrison on behalf of Adfit reiterated the specific points made in its complaint, and then responded to TVNZ's reply. He advised that Adfit not had tried to enforce Rosemary King's contracts. Rather, it had lodged a negative credit rating against her with Baycorp Advantage. He wrote:
There was no discussion of how Rosemary King essentially attended the gym for 2 months without paying a cent. My point to Fair Go , which was again not mentioned in the item, was that if Rosemary had been caught shoplifting, taking goods without paying for them, then she would be liable for the legal consequences of this. Yet in this instance she has done the same thing, used the services of the gym without paying, and yet she is made out to be a victim by Fair Go . Our opinion, again not mentioned, is that it was the gym who was the victim in this case and did not receive a “Fair Go”.
 In regard to Irina Orlovskaya, Mr Morrison said “our major argument” with her had been omitted from the item. That argument, he explained, was that all of Ms Orlovskaya's dealings with Adfit, including some not mentioned by Fair Go, supported his view that she had a clear understanding of the contract. Another matter omitted from the item, Mr Morrison added, was the discussions with her about transferring the contract to someone else when, after three months, she decided not to attend the gym anymore. However:
None of these facts were covered by Fair Go . What they instead did was ambush me for sensational effect with information not previously provided about who wrote the letters we received with Irina's signature on them. Fair Go clearly presented an unbalanced and unfair view of the contract in an attempt to prove their point. They again deliberately provided selective information from our side in order that they could be seen to be “fair” when in reality there was no real objectivity in the report.
 Turning to the credit contract issue, Adfit agreed that it had declined to provide the legal opinion to TVNZ, but said all the points had been covered in discussion with TVNZ prior to the broadcast. Further:
During their interview with me Fair Go attempted to discredit the claim of additional benefits received by Adfit members. As they were unable to do so these portions were, of course, edited out to be replaced with a cursory attempt at fairness very briefly outlining our response to the many invalid accusations made.
 Mr Morrison then said that the item had damaged Adfit's business and it sought the broadcast of an acknowledgement that the standards had been breached, together with an apology.
Broadcaster's Response to the Authority
 TVNZ commented that there was a difference of opinion as to whether Brenda King (Rosemary's mother) was present when Rosemary signed the contract but also whether Brenda had signed the direct debit authority. However, TVNZ pointed out, the item had presented Mr Morrison's opinion that she had signed the authority. The programme had also included Adfit's comment about the action it had taken in regard to the contract. Further, TVNZ noted that at no time previously had Rosemary's behaviour been likened to shoplifting.
 TVNZ reiterated that Irina Orlovskaya had signed the contract because she believed she was signing up for a trial period.
 In regard to the credit contracts issue, TVNZ denied that Adfit had provided a “large amount of information” prior to the broadcast. It said the information provided was “paraphrased fairly and accurately” and it was not aware that some of the correspondence included a Queen's counsel's opinion.
Complainant's Final Comment
 Adfit referred to five specific matters in its final comment:
(i) It was not in dispute that Mrs Brenda King had signed a direct debit authority but, the complainant contended, Fair Go had obscured the matter.
(ii) While Fair Go had taken care to avoid broadcasting any defamatory comment by Adfit about Mrs King, she had been allowed to advance a defamatory comment about Adfit – that it was a business with “ no moral responsibility ” .
(iii) Adfit maintained that Ms Orlovskaya had understood the contract sufficiently to correct the instalment amount before signing, but that point had been “deliberately left out” to help Fair Go's case.
(iv) Further, TVNZ had acknowledged, but the item had not informed viewers, that Ms Orlovskaya had gained a clear understanding of the contract soon after signing but had chosen to do nothing about it at the time.
(v) Enclosing a letter sent to Fair Go before the broadcast, Adfit said it explained why its contract was not a credit contract, but that information had not been included in the item.
 TVNZ responded to each of Adfit's five points:
(i) There remained disputes both whether Mrs King was present when Rosemary signed the contract, and whether she herself had signed the direct debit authority. TVNZ emphasised that the 15 year-old Rosemary signed the contract – not her mother.
(ii) Mrs King was advancing, as she was entitled to do, her genuinely held opinion .
(iii) Ms Orlovskaya, TVNZ repeated, believed that she had signed up for a trial period at the gym. TVNZ explained that Adfit charged a one-off joining fee which, as part of common practice, was added to the total amount and paid by instalment. While Ms Olovskaya had agreed to that, she had also understood that she had been told by the Adfit representative that she could terminate the contract in writing at any time... . TVNZ stated:
She did not understand that she would be unable to cancel the contract because she had been given information to the contrary by the woman who signed her up.
(iv) Ms Orlovskaya had not gained a full understanding of the contract until she received Adfit's letter, some three months after signing the contract, which advised her that she was not able to cancel the contract. At that time, TVNZ said, she had re-read the agreement with the aid of a dictionary and realised that she had signed a binding contract for 22 months.
(v) TVNZ contended that Adfit's lengthy legal argument was summarised during the studio interview.
 Adfit in response wrote:
(i) Mrs King had signed the direct debit authority and, at that point, had agreed to pay for the membership.
(ii) The presentation of only one “genuinely held opinion” displayed TVNZ's “selective approach” to the contents of the item.
(iii) Adfit advised the Authority:
For your information the matter of Irina Orlovskaya was heard in the Disputes Tribunal at Auckland on 25 November. The referee having heard the evidence of both parties found that Ms Orlovskaya had entered into a perfectly legitimate contract and was liable to make further payments to us under this contract. There was nothing more that Adfit could have done to make this contract any clearer or confirm the details with Ms Orlovskaya as we did. We believe this was the only outcome an independent party could come to after reviewing all the evidence and without trying to create a “story”.
(iv) The matter regarding Rosemary King, Adfit advised, was set down for the Disputes Tribunal on 5 December and “we are confident of a similar outcome”.
(v) TVNZ's brief summary about Adfit's view of its contract did not balance the extensive discussion given to the views advanced by the Ministry of Consumer Affairs.
 The complainant, Adfit Membership Services Ltd, was the subject of an investigation by Fair Go . Broadly, it contended that it did not receive a fair go, and specifically that the item breached the standards relating to balance, fairness and accuracy. While the specifics raised are obviously different to other complaints determined by the Authority in regard to items broadcast on Fair Go , the thrust of the complaints is usually similar. The Authority also notes Fair Go explicitly approaches the issue from the perspective of the dissatisfied customer. In these circumstances, the Authority considers that it is appropriate to subsume the matters raised by Adfit as allegations that it was not dealt with fairly – Standard 6. Furthermore, in view of the approach taken by Fair Go, the Authority expects TVNZ, as the broadcaster, to present convincing arguments as to why it has called the complainant – Adfit on this occasion – into question.
 Dealing first with the complaint concerning the treatment of Adfit in relation to Rosemary King, the Authority accepts that Rosemary King, aged 15, signed the contract. It also accepts that Mrs King's comment about Adfit's moral responsibility on having a 15-year-old sign a contract was not in breach of the standards. The Authority notes that Mrs King admitted that she had some responsibility for the situation. It considers that the item's focus on Adfit's reaction to issues about Rosemary's age was presented fairly. Contrary to Mr Morrison's statement, the item did mention Rosemary's free use of the gym.
 Turning to Irina Orlovskaya, the Authority appreciates the basis for Adfit's contention that she was aware, soon after the contract had been signed, of her obligations. It was based on Adfit's understanding that Ms Orlovskaya was fully conversant in English and, from the correspondence, that was a justified view. However, having viewed the item, it was also apparent that Adfit's understanding about Ms Orlovskaya's abilities was incorrect.
 The Authority considers that the parts of the item relating to Ms King and Ms Orlovskaya do not involve breaches of broadcasting standards. They reflected genuinely held differences of opinion about the situations which gave rise to the concerns advanced in the item by Ms King and her mother, and Ms Orlovskaya. Although he argued that the item did not include his full explanation, the Authority considers that Mr Morrison was given the opportunity to explain why Adfit has taken the actions that it had in regard to Ms King and Ms Olovskaya.
 The Authority upholds one aspect of the complaint regarding the discussion about whether or not Adfit's contracts were credit contracts. TVNZ said that to the extent that Adfit supplied Fair Go with information, it presented Adfit's views together with the view it had obtained from the Ministry of Consumer Affairs. TVNZ explained that items on Fair Go always ended with advice to consumers and, in this instance, that information was that Fair Go would pass information on to its viewers about relevant cases going before the Disputes Tribunal or the Courts.
 The Authority does not accept TVNZ's explanation as an adequate summary of the information that Adfit had provided. Adfit referred to a letter it had sent Fair Go a week before the broadcast, which the Authority has seen, in which it advised that it had “previously been successful in Disputes Tribunals and District Court cases where the credit contract issue has been raised”. It described the comment broadcast in the item as “clearly inaccurate”.
 Accordingly, the Authority does not accept that the comment about possible future relevant cases presented Adfit's position fairly. The item's suggestion that the matter had not been legally tested, contrary to the advice it had received from Adfit, was, in the Authority's opinion, unfair to Adfit and in breach of Standard 6.
 In reaching this decision, the Authority records that it has considered whether the limits it has placed upon the broadcaster's right to freedom of expression, as contained in s14 of the New Zealand Bill of Rights Act 1990, are demonstrably justified as required by s5 of the Bill of Rights Act. The Authority is satisfied that the exercise of its power on this occasion does not unduly restrict the broadcaster's right to express itself freely. In coming to this conclusion, the Authority has taken into account all the circumstances of this complaint, including the nature of the complaint, and the potential impact of the order.
For the above reasons, the Authority upholds the complaint that the broadcast by Television New Zealand Ltd of an item on Fair Go on 10 September 2003 breached Standard 6 of the Free-to-Air Television Code of Broadcasting Practice.
 Having upheld a complaint, the Authority may make orders under ss.13 and 16 of the Broadcasting Act 1989. It invited submissions from the parties.
 Pointing out that its business had been affected adversely by the item, Adfit contended that “as a minimum” TVNZ should publish a statement summarising the Authority's decision together with an apology. Mr Morrison also sought his reasonable costs which amounted to $1920.00. TVNZ argued that no order should be imposed as only part of the complaint had been upheld. TVNZ also pointed out that Fair Go had sought details of Disputes Tribunal decisions before the broadcast, but they were not delivered “as promised”
 The Authority sought further details about this matter from both Adfit and TVNZ. It acknowledges that the decisions were sought and were not handed over, but accepts that TVNZ failed to ask for them on a specific occasion when the parties met to carry out filming for the item. It would appear that the decisions were not handed over given some degree of mistrust between the parties.
 In its decision on the complaint, the Authority decided that the Fair Go item was unfair as it suggested that Adfit's contracts were yet to be tested before the Disputes Tribunal or the Courts. Fair Go also advised viewers that it would report the outcome of any cases. The Authority accepts that such cases had taken place. It therefore imposes the following order.
Pursuant to section 13(1)(a) of the Broadcasting Act 1989, the Authority orders Television New Zealand Ltd to broadcast a statement within two weeks from the start of the next series of Fair Go. The statement may be presented as an update to the item broadcast on 10 September 2003 and will explain the outcome of the decisions by the Disputes Tribunal reached in the majority of cases involving Adfit contracts. The statement will refer expressly to the decision in the case involving Irina Orlovskaya. The statement shall be approved by the Authority and broadcast on a day and at a time to be approved by the Authority.
The Authority draws the broadcaster's attention to the requirements of section 13(3)(b) of the Act for the broadcaster to give notice to the Authority and the complainant of the manner in which the above order has been complied with.
Signed for and on behalf of the Authority
11 March 2004
The following correspondence was received and considered by the Authority when it determined this complaint:
1. Adfit Membership Services Ltd's Complaint (through K G Morrison, General Manager) to
Television New Zealand Ltd – 11 September 2003
2. TVNZ's Response to the Formal Complaint – 8 October 2003
3. Adfit's Referral to the Broadcasting Standards Authority – 14 October 2003
4. TVNZ's Response to the Authority – 14 November 2003
5. Adfit's Final Comment – 20 November 2003
6. TVNZ's Response to Adfit's Final Comment – 28 November 2003
7. Adfit's Second Final Comment – 2 December 2003
8. Adfit's Submission in regard to an Order – 27 February 2004
9 TVNZ's Submission in regard to an Order – 1 March 2004
10. Correspondence from both Adfit and TVNZ – 4 March 2004