When marketing your business, advertising is an integral limb. It’s a commonly accepted and legitimate way to attract customers, provided you don’t stray outside the bounds of the law. Specific rules apply to different types of advertising. In this article, we’ll discuss was/now pricing, the rules and some familiar brands caught foul with their pricing.
The Australian Consumer Law (part of the Competition and Consumer Act 2010 (Cth)) prohibits corporations, in trade and commerce, making false or misleading statements concerning the existence of price reductions. In simple terms, the Australian Consumer Law (ACL) prohibits businesses from using ‘was/now’, or strikethrough advertising when the business rarely sold products at the ‘was’ or ‘original’ higher price. The policy behind this is to prevent businesses from tricking consumers into believing real savings exist where only phantoms lie.
Misleading ‘was/now’ pricing
You might be familiar with stores whose products are always on sale. These stores may be using misleading ‘was/now’ advertising if the store never sells its products for the higher ‘was’ price. For example, statements used on advertising such as ‘was $200, now $120’ or ‘$60/$40’ mislead if the products were never sold at the full $200 or $60 price tag. Advertising can still be misleading if the products are sometimes sold at the higher ‘was’ price.
Dodgy Jewellers, Sneaky Snooze
It seems some of Australia’s mass market jewellers are particularly fond of this kind of misleading and deceptive conduct. Both Zamels and Prouds were found to use misleading ‘was/now’ pricing.
Zamels used strikethrough and ‘was/now’ advertising in a number of sale catalogues. This misled consumers into thinking they would ‘save’ by buying during the sale period. However, this was not the case. Zamels had an aggressive discounting policy which meant that their customers rarely paid full price outside sale periods.
Prouds did not receive much love from the Australian Competition and Consumer Commission following its Summer of Love catalogue in February 2006, and its Love You Mum sale catalogue in May 2006. The ‘was/now’ pricing used in these catalogues was found to breach ‘was/now’ pricing provisions in the ACL’s predecessor, the Trade Practices Act.
You Snooze, You Lose
Snooze, a bedding and bed linen retailer, was found to be in breach of Trade Practice Act was/now pricing provisions. In 2008, over the course of two months, Snooze’s ‘50 Months Interest-Free’ marketing campaign displayed many products using ‘was/now pricing’. The retailer, however, never sold these products at the ‘was’ price. Snooze had to write to customers and apologise, offering them each a $50 gift voucher.
In summary, advertising sales is a legitimate way to attract customers and get rid of excess stock. However, adhere to the golden rule. Don’t use ‘was/now’ pricing or strikethrough pricing when the perceived savings are non-existent. If you never sell your products at the ‘was’ price, don’t tell consumers you’re offering a discount. You risk landing yourself in hot water if you do.
Questions? Please get in touch on 1300 544 755. Our advertising and marketing lawyers would be delighted to assist you.