Product exclusion from “Storewide discount*” found misleading, despite “T&Cs apply” disclaimer

27/07/2021·2 mins to read

Product exclusion from “Storewide discount*” found misleading, despite “T&Cs apply” disclaimer

In this article, we consider the latest Australian regulator’s decision where a retailer was found to be misleading in relation to their storewide discount promotion.

Key takeaways

Australian camera retailer digiDirect has paid almost $40,000 in penalties after the Australian Competition & Consumer Commission (ACCC) found it had misled consumers as to the extent of sales.
The ACCC found that digiDirect’s use of the phrase “15% off storewide” and “20% off storewide” was misleading when hundreds of products were actually excluded from the sale.
Amongst other things, the ACCC found that it was not possible to qualify “storewide discount” in a way that was not misleading. Even the use of “terms and conditions apply” or “terms and exclusions apply” in a prominent font would not be sufficient.
New Zealand retailers should ensure they clearly understand the legal boundaries for making discount and sales claims.

Background

Digital Imaging Express Pty Ltd, trading as digiDirect, is an Australian camera and electronics retailer. As part of three sales events in 2020, digiDirect ran promotions on its website, social media accounts and via direct marketing material which included the following headline statements:

“15% OFF STOREWIDE” and
“20% OFF STOREWIDE”.

Examples of digiDirect’s storewide promotions:

Despite the advertisements suggesting that the discounts applied to all products across the store, in reality five to seven percent of digiDirect’s products were excluded from the sale, including a number of popular cameras, lenses and accessories. All the advertisements did include the words “terms and conditions apply” or “terms and exclusions apply” but this was presented in a much smaller font.

Ultimately, the ACCC found that advertising a “storewide” sale was misleading. Of note, the ACCC found that digiDirect would still have been misleading consumers even if the disclaimers “terms and conditions apply” and “terms and exclusions apply” had been more prominent, on the basis that that the “storewide discount” representation was not capable of being qualified.

What does this mean for you?

The digiDirect ruling serves as a reminder for New Zealand businesses to consider their sales and marketing practices, particularly in relation to the effectiveness of disclaimers.

In New Zealand, a business can be found to be in breach of the Fair Trading Act 1986 and/or the Advertising Standards Code if an advertisement is, or is likely to be, misleading. While the use of qualifying or limiting language via disclaimers it not expressly prohibited, there are a number of factors that should be considered wherever disclaimers are used.

While each ad (and any associated terms and conditions) should be considered on a case-by-case basis, we recommend time is taken to consider at least the following:

What is the overall impression of your headline claim?
Are you using any claim that cannot be qualified? For example, “all”, “everything”, “storewide”?
Does the ad make all material terms and conditions clear?
Are your disclaimers prominent, clear and legible?
Do you have reasonable grounds for the representations made?