$780k fine for false ‘discounts’

The Auckland District Court has fined the handbag and luggage retailer Strandbags $780,000 for misleading customers with false discounts and sales.

“Strandbags routinely advertised its products as if they were significantly discounted or being sold at special prices, which was not true,” Commerce Commission chair Anna Rawlings said.

“Our investigation found that some products had never been sold at the higher price from which a discount was said to be made, while others were on sale for so long the prices could no longer be said to be special.”

Strandbags used numerous pricing strategies between 2018 and 2020 to mislead customers about available discounts or “special” prices, Rawlings said.

“We found prices of certain products were artificially increased prior to the sale, in order to make the discount seem more significant. Other products had been repeatedly discounted, but only ever referring to the very original ticket price as a comparison, despite being sold at different, lower, prices since.”

In the Auckland District Court, Judge Claire Ryan concluded that the company’s practice of increasing prices and then immediately discounting them was deliberate.

Extended and repeated discounting was “significantly” or “highly” careless, bordering on reckless, she said.

Judge Ryan agreed with the Commerce Commission that Strandbags’ profitability was partly due to breaching the Fair Trading Act.

The commission said Strandbags’ misleading practices could have made people believe they were getting a better deal than they really were.

Rawlings said businesses needed to review their pricing processes and current deals, especially with Black Friday and Christmas approaching.

Discounts should not be promoted in a way that “entices consumers to make a purchase” if that discount wasn’t as good as it appeared.

Shoppers were advised to research prices before making a purchase.