Bike Barn fined over false discounts

Bike Barn has been ordered to pay $ 800,000 over an advertising campaign that claimed bikes had been heavily discounted when they were being sold full price.

Bike Retail Group and Bikes International, which were operating as Bike Barn during the two- year period in question, were sentenced in Auckland District Court by Judge David Sharp yesterday.

The companies earlier pleaded guilty to 16 charges brought by the Commerce Commission under the Fair Trading Act. It has since changed its advertising.

The court was told that in addition to falsely claiming that bikes were being sold at half- price, Bike Barn’s socalled “clearance sales” were no different from their day- to- day operation.

According to the agreed summary of facts, a common tactic was to represent savings using was/ now claims — “was $ 999, now $ 499”.

The company also generated a sense of urgency, advertising “final days” clearances which were no different from standard prices.

Bike Barn spent about $ 2 million a year on its advertising campaigns, according to the summary.

Judge Sharp called the offending “calculated”, “misleading” and “pervasive”, saying consumers were disadvantaged by the false representations in Bike Barn’s advertisements.

Bike Barn’s turnover was “significantly increased” during the campaigns.

However, Judge Sharp said he was unable to see this as an aggravating factor as he did not know enough about the companies’ operations.

He acknowledged the early guilty pleas and co- operation with the Commerce Commission, giving the companies a 33 per cent discount from his $ 1.2m starting point.

Commission lawyer Alysha McClintock said Bike Barn’s campaigns were the “essence” of its business model.

“At its core, what Bike Barn did was to represent that they had bikes on very special deals that were not usually available. In fact, often the opposite was the case — they were usually available at that so- called discount price. The sticker price was entirely illusory.”

Bike Retail Group was ordered to pay $ 720,000 and Bikes International $ 80,000. Yesterday the company apologised “for any confusion caused by its advertising.”