Retailer fined for misleading advertising on discounts

Shirt retailer Charles Tyrwhitt was fined $10,800 by the ACCC for advertising was / is pricing when the shirts were never sold for the was price. The Age has the story.

This is an important story as the obligations on retailers when it comes to price claims is clear. The ACCC website offers excellent guidelines on this specific topic:

Two-price comparison advertising
Businesses often make comparisons between product prices being charged and:

• the company’s previous pricing (including ‘was/now’ or ‘strike through’ pricing or by specifying a particular dollar amount or percentage saving)
• the ‘cost’ or wholesale price
• the competitor’s price
• the recommended retail price (RRP).

Businesses that use such statements must ensure that consumers are not misled about the savings that may be achieved.

Statements such as ‘Was $150/Now $100’ or ‘$150 Now $100’ are likely to be misleading if products have not been sold at the specified ‘before’ or ‘strike through’ prices in a reasonable period immediately before the sale commences.

Such statements are also likely to be misleading if only a limited proportion of a product’s sales were at the higher price in the period immediately before the sale commences. The volume or proportion of sales that may result in such statements being misleading will depend on the circumstances of each case.

The length of the period will depend on factors such as:

• the type of product or market involved
• the usual frequency of price changes.

If a business has a policy or practice of discounting goods when not on sale and uses two-price advertising in relation to sale periods, there is a significant risk that the use of two-price advertising will involve conduct that is misleading. The business would be representing to consumers that they will make a particular saving if they purchase the item during the sale period, when this is not necessarily the case.

Similar considerations apply to the specification of dollar amount or percentage savings such as 60% off.

I mention this today as I know of businesses that use was / is and discount pricing when the price promoted is the only price the goods have ever been sold for. As the story in The Age shows, you don’t want to be caught misbehaving as the financial penalty is considerable.

In our channel there are risks in the ink space particular.