Background

The charges allege that Strandbags has engaged in misleading and deceptive pricing practices in breach of their obligations under s 10 of the Fair Trading Act.

The conduct allegedly took place between July 2018 and January 2020 and involved continued use of the following pricing practices:

• was/now pricing ie WAS $289 NOW $144.50,
• strikethrough pricing ie $349.00 $174.00,
• percentage discount claims ie 40% off,
• savings amount claims ie save $50, as well as
• artificially inflating prices prior to promotions.

The Commerce Commission alleges that the advertised products were never sold at the higher prices indicated by the pricing claims or had been on sale for so long that their price could no longer be considered special. The Commerce Commission considers that such conduct is likely to mislead and deceive customers by suggesting that products were discounted more heavily than was in fact the case.

The case is currently before the courts, so a final ruling on the legality of such practices is yet to be determined.

Relevant legislation

The charges were brought under s 10 of the Fair Trading Act, which provides:

“No person shall, in trade, engage in conduct that is liable to mislead the public as to the nature, manufacturing process, characteristics, suitability for a purpose, or quantity of goods.”

Retailers should remain aware of their obligations under s 10 when setting prices and promotions for their products. The Commerce Commission has created a tip sheet and guidance on promotions for retailers and has recently issued the following advice on s 10:

“…when deciding on pricing, businesses must take care not to mislead consumers. Any representations made about price, including special or discounted prices, must be clear, accurate and unambiguous. For example, savings must be genuine by comparison with the usual selling price of the product. They must not lead consumers into thinking that they are getting a better deal than they are in fact getting.”