Retailers put on alert about using misleading pricing

Thousands of retailers have received an open letter from the Commerce Commission, highlighting pricing practices which might breach the law, and offering guidance on how to avoid them.

The open letter is published on the Commission’s website, and was sent to several thousand retailers via Retail NZ, and to nearly 200,000 businesses and advisers via Business.govt.nz’s e-newsletter.

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.”

The letter 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 included misleading claims about pricing and applicable terms. In the past, the courts have sentenced a number of other retailers prosecuted by the Commerce Commission in relation to misleading pricing practices.

Complaints about pricing were the single biggest category of complaint received by the Commission last year, and that trend is accelerating so far this year.

“Up to the end of April complaints about pricing were far and away the single biggest category, well ahead of complaints about goods, and pricing is a particular area of focus for the Commission’s compliance education and enforcement work,” said Ms Rawlings.

“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.

Read more, including the letter, in the media release.