- Exaggerated discounts / 'was/now' discounts – this includes situations where the product was never (or has not been for a long time) at the price which it is advertised as being reduced from i.e. a $20 product is advertised as $10, being 50% off, however the product is never actually sold for $20, therefore the discount amount is exaggerated.
- Continual promotional pricing – continually selling products at a discounted price, giving a misleading impression that the promotional price is less than the price a consumer would normally pay.
- 'Final days' of a sale or 'clearance prices' – creating a misleading sense of urgency if in fact the sale is continuing or the price is not changing.
- Limited stock at discount prices – advertising products on sale 'from $10' or '50% off' when only a very small amount of products are actually at the price, or attract that discount.
- Contraventions of the Fair Trading Act can result in a number of enforcement measures, including fines of up to NZ$600,000 per breach for companies.
- Bike Barn was fined NZ$800,000 earlier this year after pleading guilty to 16 representative charges under the Fair Trading Act. Bike Barn had made representations that consumers were purchasing bikes at a significant discount from their retail price, which when investigated, only 30 out of 6000 bikes reviewed were sold at the 'full retail price'. Bike Barn's clearance sales and 'final days' marketing promotions also caused it problems with bikes often being the same price before and after the sale dates.
- Trustpower was fined NZ$390,000 for
misleading advertising. Trustpower pleaded guilty to seven
charges laid under the Fair Trading Act in respect of its
advertising campaign for unlimited Broadband at a cost of $49 for
12 months. The main feature of this case was a heavily
emphasised headline which was in fact extensively caveated by terms
and conditions in the much smaller print. As it turned out,
the offer was only available on a 24 months contract and the price
increased to $79 a month in the second 12 months of that 24 months
term contract, resulting in an average monthly cost of around $64 a
month. There were also cancellation fees should a customer
want to terminate within the 24 months. The advertisement
took a number of forms, including TV, online and billboard
advertising. While the statements made were technically true,
the Judge commented that the way that they were presented was
seriously misleading. Matters that were emphasised in the
- the disclaimers being in a much smaller and less prominent text than the headline message;
- no reference was made to the disclaimers in the voiceover;
- the disclaimers appeared while graphics of fireworks were going off on the screen which would have distracted consumers from attempting to read the fine print.
- Accurate; and
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.