Not so Good Guys: ACCC cracks down on misleading store credit and ‘StoreCash’ promotions

The Australian Competition and Consumer Commission (ACCC) has recently commenced proceedings in the Federal Court against The Good Guys Discount Warehouses (Australia) Pty Ltd (The Good Guys) for allegedly misleading consumers about its store credit and 'StoreCash' promotions, and failing to provide store credit to thousands of eligible consumers, in contravention of:

• sections 18(1), 29(1)(b) and (m), 32(2) and 34 of the Australian Consumer Law, Schedule 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law)
• alternatively, Sections 12DA(1), 12DB(1)(a) and (i) and 12DF(1) of the Australian Securities and Investments Commission Act 2001 (ASIC Act).

Background

Between July 2019 and August 2023, The Good Guys ran 116 store credit (Store Credit Promotions) and 'StoreCash' promotions (StoreCash Promotions), offering consumers store credit or 'StoreCash' if they purchased goods of a specified value.

The ACCC alleges that the advertising material for the offers was misleading because it failed to disclose (or adequately disclose) that:

• to qualify for store credit, it was not sufficient to purchase goods of the specified value
• consumers were required to opt-in to receive marketing materials from The Good Guys and remain opted in for a minimum period
• the store credit or StoreCash had to be used within a certain, short period of time (as short as seven days).

In addition to this, The Good Guys failed to provide store credit to thousands of eligible consumers.

Advertisements for the promotions

During the period in which The Good Guys ran the promotions, it undertook separate advertising campaigns. These campaigns were published on its website, social media platforms, SMS messages and emails, digital catalogues, print media, web push notifications and via third-party online advertisers.

The ACCC alleges that the advertisements for the promotions were misleading because of the following conditions:

• consumers were required to opt-in to receive marketing communications: The Good Guys represented to consumers that the only requirement to qualify for the Store Credit Promotion was to make purchases of a minimum amount or if they purchased an advertised good above a minimum value during the promotional period. The ACCC alleges this was misleading because each Store Credit Promotion was subject to consumers opting-in and consumers would only receive a store credit if they opted-in (and remained opted-in) to receive The Good Guys’ marketing communications
• the store credit had an expiry date: The Good Guys represented to consumers that the store credit or StoreCash provided would not expire or would remain available to use for a reasonable time. The ACCC alleges this was misleading because the store credit and StoreCash expired in a specified period, which ranged from as short as 7 days to 92 days. Alternatively, some advertisements did not disclose, or adequately disclose, that the Store Credit Promotions and StoreCash Promotions were subject to the credit-expiry condition. This created a misleading impression that the store credit or StoreCash offered would function like cash or gift cards and would not expire or would remain available for use for a reasonable period.

The fine print in The Good Guys’ advertisements failed to clearly disclose the opt-in and credit-expiry conditions. In many instances, the fine print did not state that the promotions were subject to any terms and conditions, but instead stated 'Learn more' or 'click for details'. Only some advertisements adverted to the existence of the credit-expiry condition, by stating that 'time limits and T&Cs apply' and 'store credit expiry may vary by promotion'. The terms and conditions on their website did not prominently disclose the credit-expiry or opt-in conditions, making it difficult for consumers to find crucial information about the promotions.

Failure to provide store credit

In addition to the alleged misleading advertising claims, the ACCC alleges that The Good Guys failed to provide store credit to many eligible consumers.

Approximately 21,000 consumers allegedly did not receive the promised store credit within the specified time frame or within a reasonable time.

Alleged contraventions of the Australian Consumer Law and ASIC Act

The ACCC alleges that, by its conduct, The Good Guys has:

• engaged in conduct that was misleading or deceptive, or likely to mislead or deceive
• made false or misleading representations about the requirements to qualify to be provided with store credit
• engaged in conduct that was liable to mislead the public as to the nature, characteristics, or the suitability for purpose of the promotions
• made false or misleading representations that the promotions were of a particular standard, quality or value, and further or alternatively, about the existence of the credit-expiry condition
• failed to provide eligible consumers with a rebate, gift, prize or other free item (being a store credit) within the time specified.

The ACCC alleges that The Good Guys benefited financially from increased sales to consumers who would not have made purchases of equivalent value if they had been aware of the opt-in requirement and the credit-expiry condition.

The ACCC is seeking consumer redress, penalties, declarations, compliance orders, publication orders and costs.

If the ACCC is successful in these proceedings, The Good Guys could face significant financial penalties. For contraventions that occurred after November 2022, the Australian Consumer Law allows fines of up to the greater of $50 million or three times the value derived from the relevant breach, or, if the value derived from the breach cannot be determined, 30 per cent of the company’s turnover during the period it engaged in the conduct. The conduct alleged by the ACCC against The Good Guys straddles the introduction of these higher penalties. 

Implications and considerations for retailers

The enforcement action against The Good Guys serves as a stark reminder for retailers to review their promotional practices.

ACCC Chair, Gina Cass-Gottlieb, stated in relation to the proceedings that "businesses should be on notice that promotional conditions must be prominently disclosed to consumers, rather than buried in hard-to-find locations, or they risk enforcement action under the Australian Consumer Law".

To avoid similar pitfalls, businesses should take proactive steps to ensure their advertising is truthful and transparent:

• ensure that all promotional materials clearly outline any terms and conditions. Avoid fine print that may mislead consumers about the true nature of the offer
• promotions should reflect genuine offers that provide real value to consumers. Avoid exaggerated claims that could lead to misunderstandings
• ensure that all staff are knowledgeable about promotions and can accurately explain offers to customers, helping to avoid potential confusion at the point of sale
• conduct regular audits of marketing and promotional practices to ensure compliance with consumer law and address any potential issues before they escalate.

Looking ahead

The ACCC has recently received additional funding for investigations and enforcements relating to the supermarket and retail sector. This influx of resources underscores the growing focus on consumer protection and the need for retailers to maintain strict compliance with the Australian Consumer Law.

As the ACCC continues to crack down on misleading advertising and pricing practices, retailers across Australia must remain vigilant in their compliance efforts. The Good Guys case serves as a crucial reminder that transparency in marketing is not just a best practice; it is a legal obligation. In the fast-paced world of retail, where customer loyalty can be easily swayed, businesses must prioritise honesty and integrity in their promotional strategies.

This is especially relevant considering the ACCC’s recent legal action against Coles and Woolworths, for allegedly misleading discount promotions. We discussed these proceedings in our recent article, ‘Down, down… to court we go: Coles and Woolworths in hot water over 'price drops'’, looking at how retailers can avoid similar pitfalls and key takeaways for the industry as a whole. The ACCC’s expanded funding reinforces the importance of ensuring that all promotions are transparent and compliant with the Australian Consumer Law.

Retailers should take this as an opportunity to review their practices and safeguard their business from potential regulatory risks.

If you have any questions about this article, or need assistance with auditing your marketing practices, 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:

Joanne Jary

Caitlin Waldron

Anneliese Castle

Share this