Legal tips for e-commerce businesses: When does a sale price become misleading? (Part 2)

Grand sale, grand sale, grand sale! It seems like every year another retailer receives a fine from the Australian Competition and Consumer Commission (ACCC) for misleading sales pricing – the old “was $250, now $25” trick when it has never been sold at $250.

While the above example is extreme, many retailers have been caught out making more subtle savings claims.

Recently, online florist Bloomex received negative attention from the regulator for making potentially inflated savings claims. While Bloomex’s website showed ‘strike through’ pricing claims (“$80 now $40”) with “50% off” statements, the ACCC alleges that Bloomex did not ordinarily offer products for sale at the higher ‘strike through’ price and that the discounts shown on the website were misleading as they were not genuine.  

Two-price comparison advertising is often used in the market to demonstrate savings. ‘Was/now’ advertising is permitted, provided that such claims do not mislead customers about the savings they may achieve. This will depend on whether:

• the product was previously offered at the ‘was’ price
• how long the product was offered at that price, whether that was a reasonable amount of time and if anyone actually purchased the product at that price
• whether other claims made are in fact true – that is, is there an actual saving?

You will often see that the ‘was’ price is the recommended retail price, but this is increasingly being called out by retailers following regulator action. Consumers will generally be aware that an “RRP” (Recommended Retail Price) is not always the price it was previously offered. The RRP must also be a genuinely available number (such as that recommended by the wholesaler) rather than a made-up number.

To avoid fines, retailers should be prepared to provide evidence that any savings claims represent a genuine reduction in price.

For other legal tips for your e-commerce business, read our first instalment on the use of ‘lifetime warranty’ on your products. If you have any questions about your sale pricing claims, please get in touch with a member of our team below.

Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Emily Booth

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