The Commerce Commission has filed seven representative charges under section 10 of the Fair Trading Act against retailer Strandbags Pty Limited over its discounting and sales practices.
The Commission alleges that between July 2018 and January 2020 Strandbags' representations about significantly discounted or special prices were liable to mislead the public.
Strandbags is an Australasian wide retailer of handbags, wallets, luggage, backpacks and business bags. It has 28 retail stores in New Zealand and also conducts website sales.
During the charge period, the Commission alleges that Strandbags routinely advertised products on 'sale' or promotion using comparative pricing, for example:
- was/now pricing, eg "was $289 NOW $144.50"
- strikethrough pricing, where a higher price was struck out and replaced with a lower one, eg "$349.00 $174.00"
- percentage discount claims, eg "40% OFF"
- savings amount claims, eg "Save $50".
The Commission alleges that this conduct created the impression that prices being offered were significantly discounted or special prices when products were in fact being sold at their usual price or nearer to their usual price than consumers would believe to be the case. The Commission alleges that advertised discounts were liable to mislead in a variety of ways. For example, some products had not been previously sold at the higher price from which a discount was said to be made, while others were on sale for so long that the prices could no longer be said to be special. The Commission also alleges that the prices of certain products were artificially inflated prior to promotion in order to make a more significant discounted pricing claim.
As this matter is now before the Court, the Commission cannot comment further at this time.
Background
Guidance on pricing
Price comparisons can give consumers helpful information and can promote competition among retailers. However, 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.
In May 2017 the Commission issued an open letter to retailers about misleading pricing, including a tip sheet for promotions.
See the Commission's guidance on pricing, including our video on discount claims and the 'usual selling price'.
Other relevant cases
Recent price-related cases taken by the Commission include:
- Bike Barn was fined $800,000 for misleading pricing (February 2017)
- Online mobile phone store Buy Mobile was warned over its price discount claims (August 2018)
- PAK'nSAVE Mangere was fined $78,000 for pricing discrepancies (October 2020).
