RULES OF ENGAGEMENT
Consumers are vulnerable to the siren call of a bargain. But it’s certainly not open slather for advertisers when it comes to promoting sales, says Kate McHaffie. Everyone loves a good sale, and therein lies the rub: you need to be scrupulous in ensuring
The Fair Trading Act 1986 (FTA) prohibits misleading or deceptive conduct in trade. To avoid falling foul of the FTA you need to make sure that you don’t market your product or service in a misleading way. Don’t assume that what you might consider harmless hyperbole will be seen that way by consumers.
Kate McHaffie is a senior associate at AJ Park. kate.mchaffie@ajpark.com
THE FTA AND SALES
Everyone loves a good sale, and therein lies the rub: you need to be scrupulous in ensuring they’re not tempted by false promises.
The Commerce Commission considers that a sale is understood by the ordinary consumer as an opportunity to buy goods at reduced prices for a limited time. You must give consumers a true picture of their buying opportunity by accurately representing both the price saving and the length of the sale.
‘WAS/NOW’ PRICING
Sales are commonly promoted with ‘was/now’ pricing—that is, comparing the discounted price with the non-sale price of the product. The ‘usual’, ‘was’, ‘normal’ or ‘everyday’ price must be exactly that. It must be the price at which your business usually sells the product, or was selling it immediately before it was discounted. A price can’t be ‘usual’ if your business has never charged that price, or sells the good or service at a range of prices, or that price has not been charged for a reasonable period of time. Similarly, if you are promoting a discount on the recommended retail price, this must be the manufacturer’s genuine RRP and must reflect a price at which the item is readily available.
DETAILS, DETAILS, DETAILS...
The reason for the sale must be truthful. For example, you should not represent a sale as a ‘closing down’ or ‘liquidation’ sale unless it really is.
Any comparisons made with a competitor’s prices must be accurate. And the goods or services compared must be exactly the same, not just similar.
You need to make any limitations on your sale clear. For example, you must say if only some of your stock is on sale, or if a special is subject to conditions. Don’t use misleading price ranges. For example, a claim of ‘up to 50 percent off store wide’ may mislead if only a small proportion of goods on sale are discounted that much.