Down, down, prices are down … or are they?

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In Brief

Retail­ers must not mis­lead cus­tomers about the amount of mon­ey they are sav­ing dur­ing adver­tised sale periods.

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ACCC v Jew­ellery Group Pty Lim­it­ed (No 2) [2013] FCA 14

Last month, the Fed­er­al Court found that Zamel’s Jew­ellers engaged in mis­lead­ing or decep­tive con­duct and made false or mis­lead­ing rep­re­sen­ta­tions by dis­trib­ut­ing numer­ous cat­a­logues pro­mot­ing the sale of jew­ellery using dual-pricing.

By using strikethrough and was/​now pric­ing tech­niques, Zamel’s rep­re­sent­ed to cus­tomers that cus­tomers would save the dif­fer­ence between the com­pared prices if those cus­tomers pur­chased the items dur­ing the sale being adver­tised in the rel­e­vant cat­a­logue. This rep­re­sen­ta­tion was mis­lead­ing because Zamel’s did not in fact sell or rarely sold the items in ques­tion at the high­er price in the peri­od imme­di­ate­ly before the rel­e­vant cat­a­logue sale period.

Court ordered that Zamel’s pay pecu­niary penal­ties of $250,000 in respect of the con­tra­ven­tions of the Trade Prac­tice Act (as it then was) and the ACC­C’s costs.

In addi­tion to the sig­nif­i­cant pecu­niary penal­ties, the court ordered that Zamel’s pub­lish cor­rec­tive adver­tis­ing, imple­ment a com­pli­ance pro­gram, con­duct a risk assess­ment to assess the like­li­hood of the con­tra­ven­tions reoc­cur­ring, estab­lish, main­tain and admin­is­ter a trade prac­tices com­plaints han­dling sys­tem, imple­ment staff train­ing and con­duct an exter­nal review of the busi­ness’ compliance.

Where to from here?

Strikethrough and was/​now pric­ing is not nov­el or new for the retail sec­tor. How­ev­er, what has shift­ed is the dura­tion of sales peri­ods. The tra­di­tion­al bi-annu­al sales peri­ods fol­low­ing Christ­mas and mid-year have been replaced with con­stant sales cam­paigns through­out the year. A walk down the main street of any cap­i­tal city through­out the coun­try reveals that a major­i­ty of retail stores are adver­tis­ing some type of discount.

Clients tell us that the result of this shift is that con­sumers are no longer pre­pared to pay full price for qual­i­ty items. Retail­ers must adapt and be cre­ative. If they need to sell goods for a reduced price for pro­longed peri­ods they need to ensure that their mar­ket­ing cam­paigns do not fall foul of the law by cre­at­ing a mis­lead­ing impres­sion.

For more infor­ma­tion or sup­port with ensur­ing that your busi­ness’s print or online mar­ket­ing cam­paigns do breach the law or for assis­tance with the imple­men­ta­tion of a trade prac­tice com­pli­ance pro­gram for your busi­ness, con­tact Swaab Attorneys.