The Commerce Commission is today publishing an open letter to retailers, highlighting pricing practices which might breach the law, and offering guidance on how to avoid them.
Complaints about pricing were the single biggest category of complaint received by the Commission last year, and currently pricing is a particular area of focus for the Commission’s compliance education and enforcement work.
Commissioner Anna Rawlings said, “Consumers look out for sales and we know that sales can drive competition among retailers and value for consumers. 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.” Ms Rawlings said.
“Overall, we want to improve trader compliance in this area through education which is why we have taken the step of publishing this letter. However, we will also continue to investigate consumer complaints and other cases that come to our attention. If necessary we will prosecute traders who we consider are breaching the Fair Trading Act by misleading consumers about the prices that they are paying or the discounts that they are receiving,” said Ms Rawlings.
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.
The letter includes a one-page summary document with tips for retailers to consider when planning price promotions, including:
– ensure discounts are taken off the usual selling price
– don’t use fine print to hide important information like extra charges
– a ‘sale’ is a brief and limited opportunity to buy at a reduced price
– ‘clearance’ sales are only for clearing goods
– do not exaggerate savings to be made or the range of goods available at a discounted price
– be careful with claims like “lowest” and “cheapest” prices.
Retailers are also directed to the Commission’s fact sheets on pricing and fine print, and are urged to seek legal advice if they have any concerns about how to comply with the law.
Consumers can contact the Commission by phoning 0800 943 600