LegalVision Close Up: Zamel’s Misleading Was/Now Pricing

In January 2013, popular jewellery store Zamel’s was fined $250,000 for misleading consumers about the savings they would make through their pricing. Zamel’s used was/now pricing, a technique commonly used by businesses to attract customers.

What Happened?

Through online, catalogue, television or in-store advertising, businesses display two prices: 

• A ‘was’ price, which is the product’s original price; and 
• A ‘now’ price, which is the current price that the business is offering.

Zamel’s published figures such as, “WAS $275 NOW $149” or strikethrough pricing. It was found such pricing misled customers as to the savings they would make, and that the consumers were only able to obtain these savings during the sale period. In reality, Zamel’s offers discounts frequently, including outside this particular sale period, and so rarely sold the jewellery at the higher price.

The Federal Court considered 44 items of jewellery. It found in each case, Zamel’s had not sold the items at the published higher price, or sold a small quantity at the higher price in the four-month period leading up to the sale.

The Federal Court handed down its decision that Zamel’s had breached section 52 of the Trade Practices Act (now the Australian Consumer Law). The Full Federal Court upheld this decision and ordered Zamel’s to pay a $250, 000 penalty as well as publish corrective notices, and put in place a trade practices compliance program. Zamel’s was also required to pay the ACCC’s costs for the matter.

Key Takeaways for Was/Now Pricing

Business owners need to make sure that their was/now pricing is genuine. Like any advertising, it is unlawful to mislead consumers. Your was/now pricing must tell the consumers accurately what they would be saving. If you have never offered the product at the higher price, you should not claim it is a ‘was’ price.

You will also need to show that you offered the higher price for a reasonable time. Not only that, but it supports your case if you actually sold the product at the higher price. There are circumstances where you may be able to claim the ‘was’ price, even if you did not sell the product at the price, but it can be difficult to prove.

Conclusion

As a business owner, you can publish was/now pricing on your advertising material and products. Make sure that whatever price you display, you can substantiate them with documentation and show that they are legitimate. Consider whether your consumers are likely to be misled by the prices you have displayed. If they are likely to think the savings are greater than reality, you may need to change your advertising.

If you are unsure about whether your advertising is compliant with Australian Consumer Law or what your obligations as a business owner are, get in touch with LegalVision’s consumer lawyers on 1300 544 755.