In the Hot Seat – Fines for Furniture Chains after Misleading Advertisements

by | Nov 13, 2019 | Business Law

Everyone loves a bargain, but what happens when the deal your getting isn’t quite as sweet as you thought?

When buying new products, people often use price comparisons as a way of assessing the value they are gaining from their purchase. Owing to this, many retailers market their products using “was/now” statements. This is where a retailer will make a representation that a particular product was previously being sold at one price, and has now been discounted to a new price during a sale period (e.g. was $500/now $250).

The ACCC has conducted an investigation into the use of these statements, with four furniture retailers being found to have made false or misleading representations to consumers. The retailers in question were Plush – Think Sofas Pty Ltd (Plush); Koala & Tree Pty Ltd (trading as Koala Living); ESR Group Holdings Pty Ltd (trading as Early Settler); and Oz Design Furniture Pty Ltd.

The ACCC claim that these retailers made “was/now” statements, when in fact the “was” price was either advertised for a very short period of time, or was never advertised at all, thereby concluding that this displayed a clear intention by the retailers to mislead consumers and induce them to purchase their products. ACCC Commissioner Sarah Court stated that “Consumers rely on comparative pricing to find the best deal available. If there are no genuine savings, businesses are misleading consumers”.

The retailers were each issued with an infringement notice by the ACCC, carrying a $12,600 penalty. The ACCC have said that these penalties are intended to send a “strong message to retailers” that this kind of behaviour will not be tolerated, and that any claimed savings should correctly reflect the reality of the situation.

With this increased scrutiny by the ACCC, businesses should be looking to their own marketing strategies and advertisements to ensure that they are compliant, and that they are not misleading consumers.

If you would like assistance in this regard, please contact our offices.

 

Important Disclaimer: The content of this publication is general in nature and for reference purposes only. It is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.

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