On 29 November 2013, the Full Federal Court dismissed an appeal by the Jewellery Group Pty Ltd (Zamel’s) from a decision of the Federal Court. In January 2013, the Federal Court ordered Zamel’s to pay a penalty of $250,000 for making false or misleading representations in relation to its use of “two-price comparison advertising” in catalogues. The Federal Court found that its use of “was/now” or “strike through” pricing was false or misleading in relation to 44 items of jewellery, as Zamel’s had either not sold the item, or made only a very small proportion of sales, at or near the “was” or “strike through” price in a four month period prior to the sale (being the period since the last regular promotion).
The Federal Court’s decision reinforces that business must take caution when utilising a dual-price advertising strategy and must accurately represent to consumers the savings that are being offered. To the extent that businesses seek to refer to a “was” price, they must ensure that:
- such a price was actually offered by the business; and
- the “was” price was a price that the “ordinary” or “reasonable” consumer would have paid, for the product in the immediately preceding period.
Businesses that have regular promotions or customarily offer significant discounts from their published rates are likely to find useful guidance in the decision. A more detailed report on the case can be found here.