Christmas. A time of year associated with spending time with family, ingesting an obscene amount of fruit-cake, and of course, Christmas Sales. For some businesses, it marks the end of their financial year, and there is often a final effort to boost sales before the books close. For others, a promotional campaign brings in some much-needed work over the quiet holiday period. But before getting carried away with the spirit of the season, businesses need first to consider some issues to ensure that the Australian Competition and Consumer Commission (ACCC) or a competitor’s injunction do not replace Santa on Christmas Eve.
In this two-part series, we set out some simple rules regarding advertising regulations to help you strengthen your business’ relationship with your customers this holiday season.
Christmas Promotional Prices
There is nothing wrong with offering discounted prices of your goods and services during the Christmas period. Where businesses get themselves into trouble is where they either don’t put enough thought into their promotion’s design, or they incorrectly advertise what they are offering.
Multiple pricing is where you promote or display a good or service with more than one price. For example, if you are offering a “special end of year price”. Mistakes can occur when reviewing your promotional materials. Especially when you are rushing to send out the final emails to your customers, or distracted by what to get your office Secret Santa.
Making a mistake is not in itself illegal. You must, however, sell the goods or service at the lowest possible price or you will be guilty of an offence. This is the case irrespective of whether you have sent a special promotion to a customer, included it in an email, advertised it on the internet or in a TV commercial. If you do find a mistake in your promotional material, be sure to sell the goods or service at the lower price until the material can be corrected.
Component pricing is where a promotion contains only part of the cost of the goods or service. We commonly see component pricing in “cash back” offers or offers where there are additional costs such as postage and handling.
Component pricing is permissible provided you also prominently display the single (total) price. Displaying the single price on the back of the promotional material or down the bottom in a tiny font will be unacceptable. “Cash back” offers typically fall foul of this rule as the price after cash back is displayed and the actual price the consumer must pay is hidden in the small print or excluded altogether.
Another example is advertising holidays or accommodation and not prominently displaying the minimum booking period or a single rate supplement customers need to pay. To ensure you stay in Santa’s good books, make sure that the single price is as large and prominent as the component price.
If you have any questions about complying with advertising regulations, get in touch! One of LegalVision’s experienced consumer lawyers would be delighted to assist you. In the meantime, please keep reading our Dos and Don’ts for your business during the Christmas season.