When advertising price reductions, to avoid risks of
misleading conduct, businesses should ensure that the goods
on sale have actually been offered for sale at the
"was" price for a period of at least two months
preceding the sale period.
Some products - rugs and jewellery are common examples -
seem to be prone to exaggerated claims about so-called sale
More experienced consumers may place little weight on these
claims, which have a reputation for exaggeration - but because
other consumers may be misled, the ACCC continues to pursue
cases of misleading conduct or false representations where it
can establish that the claimed price reductions are not
Recently, the Federal Court found a number of claims of
prices being "was/now" misleading, and gave some
useful tips on how to avoid breaching sections 52 and 53 of the
Trade Practices Act.
The Mother's Day misrepresentation
Two Mother's Day jewellery catalogues made 17 claims
about the savings available on selected items.
Some of the sale items had never in fact been offered for
sale at the claimed "was" price, while others had not
been sold at that price for at least four months prior to the
sale, having been sold at lower prices than that claimed as the
"was" price immediately prior to the sale period.
In considering what a hypothetical reasonable consumer might
interpret from a claimed "was" price, the Court put
aside those consumers who were aware that discounting and
bargaining is a regular feature of the jewellery industry and
that it is frequently possible to purchase jewellery for less
than the advertised ticketed prices.
Business does not need to show that the items on offer were
actually sold at the higher "was" price prior to the
sale, as long as it can show that they were
offered for sale at that price in the period
immediately prior to the sale.
This places a significant burden on business to make sure
that their advertising of sale promotions is accurate and that
any claims about the product being sold, particularly in
relation to price, can be proved by evidence.
The Court rejected the claim that it was good enough to show
that the item in question had been offered at the
"was" price at some "comparatively approximate
point in the past" such as four months before the sale. It
ruled that the juxtaposition of "was/now" pricing
implied a representation relating to the price at which the
item could have been purchased immediately
before the sale commenced.
What you should do?
There have been a number of ACCC challenges over so called
dual pricing by advertising in catalogues, particularly where
the sale items had been sold before the sale at significantly
lower prices than those claimed to be the "was"
Any retailer contemplating dual pricing claim of this kind
should do their homework on the price reductions and make sure
they have a satisfactory trail to prove the actual prices at
which the goods on sale had been offered immediately prior to
the sale period, taking into account the minimum two month
period suggested in this decision. The ACCC is likely to
continue to be vigilant about this area especially where retail
consumer products are concerned.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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