Pricing problems a 2017 priority

The Commission is taking a close look at pricing this year, building on two high profile cases.

Bike Barn was fined $800,000 for misleading price claims and 45 charges have been laid against Bunnings for its various “lowest price” claims. Bunnings has pleaded not guilty to the charges.

“Retail pricing is a focus area for us in 2017. We know that consumers are being misled by pricing claims, such as in the Bike Barn case, and we know it infuriates consumers. We want retailers to be on notice that this is a focus area for us and we will be actively enforcing the law,” said Antonia Horrocks, the Commission’s General Manager Competition.

Bike Barn was sentenced in early February for conduct that Judge Sharp described as “calculating” and “pervasive”.

Bike Barn used exaggerated discounting strategies – such as “half price” claims – to give customers the impression they were buying bikes at significant mark downs, when in fact they were not. Of nearly 6000 sales analysed in the investigation, only 30 were made at so-called full price. Twenty-two of those full price sales came after the Commission began investigating.

The Commission wants to build awareness of pricing issues following the Bike Barn case, says Ms Horrocks.

“We are increasingly seeing this sort of conduct as retailers rely more and more on making sales during promotion periods,” says Ms Horrocks.

“Genuine discounts are great for consumers. Exaggerated or false discounts are misleading and unlawful,” she says.

The Commission is also seeing consumers misled by other pricing practices such as “opt out”, where pre-selected goods or services are added, usually during an online purchasing process.

The Commission has already achieved notable behavioural change over this sort of conduct. Air New Zealand, JetStar and Air Asia all stopped adding such services during online booking processes following Commission intervention.

Other companies which agreed to end the practice include NakedBus, House of Travel, Dash Tickets, Ticket Direct and Chocoprice.

The Commission’s 2016 Consumer Issues Report noted that 26% of consumer complaints are about pricing concerns.

Read the full 2016 Consumer Issues Report.