On 11 January 2012, the ACCC announced that it had fined Furniture Galore $19,800 in relation to misleading conduct concerning its catalogues.
Furniture Galore advertised that certain items were on sale at reduced prices and that consumers could make savings below the usual selling price. In fact, Furniture Galore admitted that it had not sold or genuinely offered those goods at the higher price for a reasonable amount of time immediately prior to the promotions or at all during the 16 month period of the promotions.
In addition to fines, the retailer has also been required to publish corrective notices in all of its stores, on its website, in an industry magazine and in the Herald Sun and it has also been required to implement a trade practices law compliance program.
The Australian Consumer Law provides that retailers cannot mislead consumers in advertising or otherwise.
It is well established that retailers are engaging in misleading conduct if they advertise savings and reduced prices in circumstances where those savings and reduced prices are not real or genuine. For example, if a retailer advertises that a product 'was $100' and is 'now $50', consumers would generally assume that the retailer had previously offered the product for $100 for a reasonable length of time immediately before the promotion. If the retailer had not in fact done so, then the advertisement would usually be misleading.
In 2008, Prouds Jewellers was caught for similar behaviour in relation to its catalogues which used 'was/now' pricing. The Federal Court found that Prouds Jewellers had engaged in misleading conduct because a number of items had not in fact been offered for sale at the 'was' price in the period immediately before the advertisements or in some cases, at all.
The Furniture Galore and Prouds Jewellers matters demonstrate that the ACCC will not tolerate misleading conduct in relation to reduced price advertising.
Key messages
When advertising reduced prices (including 'was/now' pricing and savings below usual selling price), retailers need to ensure that the items had been genuinely offered for sale at the higher price for a reasonable amount of time immediately before the advertisement.
Retailers need to ensure that their advertisements and catalogues do not mislead consumers.
Retailers need to consider the overall impression given to consumers by the advertisement and whether that overall impression is misleading.
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