Between November 2008 and May 2010 Zamel’s made statements in six catalogues and a flyer, which were provided in store, on its website and via letter box drop, with regard to 44 different jewellery items. The letterbox drop involved the distribution of approximately 3 million copies of the catalogue. Zamel’s had not sold or had rarely sold the items at the higher price displayed in the 4 months prior to the start of the sale. This meant that consumers would not in fact ‘save’ the difference between the two displayed prices. The intention was to induce consumers to purchase the items during the sale periods.

As such, the Court found that the statements amounted to misleading or deceptive conduct and false and misleading representations as to price. Accordingly, the seriousness of the conduct required a penalty to deter other retailers from engaging in similar conduct.

In addition to the civil penalty of $250,000, the Court also ordered Zamel’s to publish corrective notices in newspapers and on its website, as well as implement a trade practices compliance programme. Further, they were ordered to pay the ACCC’s costs.

On appeal, the Full Federal Court upheld the original decision.

Zamel’s advanced an argument that the displayed prices were merely “offer prices” and were not representations as to savings. In other words, a consumer would place emphasis on the price they could purchase the respective item, not what they were supposedly saving.

However, the appeal Court endorsed the Court of first instance analysis of the different classes of potential consumers, finding that Zamel’s arguments ignored the difference in classes, particularly those consumers who weren’t aware of discounting outside of sale periods. That is, these “unaware” consumers would consider the displayed prices to mean that if they purchased an item during the sale period, that they would be saving the difference between the two prices. The appeal Court confirmed this view, finding that:

“it is difficult to see how any other conclusion is reasonably open….It defies common sense to conclude that the unaware customers, at least, …would regard the “strikethrough” or “was” figure as anything other than the price at which the jewellery had been sold. After all, what was the purpose of the designated percentage saving otherwise? Prospective purchasers are interested in the difference between the pre-sale and sale prices; a difference in the value of offers is meaningless to them. They want to know how much money they will save. That is what the brochures were telling them.”

Since 2011, the ACCC has placed particular emphasis on two price advertising and misrepresentation of prices of goods and services, with a significant number of successful actions brought in the Federal Court. Having regard to the decisions, businesses should take care that they consistently display a single price for goods and services, and not misrepresent the price or any discounts potentially afforded to a consumer.

Suggestions:

  • Check, and obtain advice regarding, advertising and marketing campaigns and ensure that any advertising material is clear, accurate and complies with the Australian Consumer Law  (ACL)  in relation to pricing and other provisions. This includes TV, radio, internet advertising, websites, catalogues and in-store signage.
  • Don’t rely on external advertising agencies, designers or copywriters to ensure such advertising and marketing campaigns comply with the ACL.
  • Train staff appropriately in relation to consumer rights, including misleading or deceptive conduct, false representations and pricing issues (this includes having staff manuals).
  • Ensure a current trade practices compliance programme is in place for both training, the reporting of incidences and dealings with regulators, including the ACCC.