$320,000 fine for Youi insurance

Thursday 15 December 2016

Misleading sales techniques have earned insurance firm Youi NZ Pty Limited a $320,000 fine in the Auckland District Court today.

By Miriam Bell

The Commerce Commission took the South African insurer to court for 15 breaches of the Fair Trading Act between July 2014 and February 2016

The breaches involved the insurer’s use of misleading sales techniques when attempting to sell policies to people seeking quotes.

On its website Youi, which specialises in home and vehicle insurance, implied that people could get a quote online when this was not possible for most people. 

Instead people received unexpected telephone sales calls from Youi salespeople seeking to complete the quote and sales process.

Some of these calls involved unlawful techniques to get a sale across the line.

During the sales process some people were told that their bank or credit card details were required to generate a quote when this was not the case.

Youi also asserted a right to payment for unsolicited insurance policies by sending letters demanding payment and/or debiting people’s bank or credit card accounts without their express permission or knowledge.

Some people also received invoices for unsolicited insurance policies that did not specify that they were under no obligation to pay for the policies because they had been unsolicited.

Youi pleaded guilty to 15 representative charges earlier this year.

Commerce Commissioner Anna Rawlings said Youi’s offending confused some people about whether they had obtained a quote or agreed to purchase an insurance policy.

People were unsure whether they were bound to pay the invoice they received or whether they could cancel the policy that was issued to them, she said.

“Our investigation focused on 66 sales calls where complainants alleged they had been misled.

“In the worst case scenario, Youi was able to attract a customer and obtain their contact details through pretext, set up policies they did not want and then charge them without permission.

“At the same time Youi made it difficult for them to cancel the policy and get refunded.”

Rawlings said the penalty handed down to Youi serves as a strong reminder to businesses to ensure that potential customers clearly understand each step of the quotation and sales process and when, and how, they are committed to any purchase.

“Businesses should also make sure that they have robust compliance programmes to assist their staff to understand their obligations to consumers.”

The fine handed down to Youi today was reduced by $100,000 due to a separate fine it received from the Insurance Council in October.

That $100,000 fine was the Insurance Council’s largest penalty to date.

Youi has paid the Insurance Council fine, but it has been warned it risks losing its membership if it diverts from acceptable practice again.

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