The Commerce Commission has warned retailers it’s targeting those who engage in misleading pricing practices after a spike in complaints last year.
In an open letter to retailers, the commission has highlighted pricing practices that might breach the law, and is offering guidance on how to avoid them.
Complaints about pricing were the single biggest category of complaint received by the Commission last year and is currently an area of focus for the Commission’s compliance education and enforcement work.
“Consumers look out for sales and we know that sales can drive competition among retailers and value for consumers,” said Commissioner Anna Rawlings.
“However, when price claims are not accurate and discounts are exaggerated, consumers do not get the ‘bargain’ they believed they were getting. It is also unfair to other retailers who are offering genuine special prices and pricing their goods accurately.”
“We are observing that some retailers’ marketing strategies place significant reliance on the use of price promotions to drive sales. We are concerned that some retailers may be misleading consumers about the savings that they offer.”
Today’s open letter has been published on the Commission’s website and is being distributed to several thousand New Zealand retailers via Retail NZ.
It alerts traders to the recent $800,000 fine handed down to the two Bike Barn companies for misleading discount claims. In addition to the Bike Barn case, Trustpower was last year fined $390,000 for advertising which was misleading about pricing and applicable contract terms.
In the past, the courts have sentenced a number of other retailers prosecuted by the Commerce Commission in relation to misleading pricing practices.
Consumer NZ chief executive Sue Chetwin welcomed the commission’s announcement and said constant sales and exaggerated discounts are prevalent in the retail trade.
“Our investigations have found stores routinely promoting the same items as ‘specials’, giving consumers a misleading impression about the savings available. If a product is regularly discounted, the retailer can’t claim a reduced price is all that special.”
Chetwin said special offers are so pervasive that more than half the products in its 2016 supermarket price survey were regularly on promotion.
In 2015, Consumer NZ also tracked prices for selected products at Farmers and Briscoes for three months and found items that were on “special” almost every week.
At Farmers, an $800 espresso machine was on “special” for 12 of the 13 weeks prices were tracked. For most of the period, it was priced at $560.
Background
The Commission has previously taken numerous prosecutions or actions against retailers for a variety of pricing conduct, including:
- in February 45 charges were filedagainst Bunnings in relation to its various “lowest price” claims
- Trustpower wasfined $390,000in September 2016 for misleading consumers about the price and terms of a bundled electricity and broadband offer.
- The Warehouse was fined $209,600 in 2009 for various Fair Trading Act breaches relating to the advertised price of goods, using bait advertising, and making false claims that certain products were ‘exclusive to The Warehouse’
