Further to our article "Everyone loves a discount but beware of was/now pricing", the Australian consumer regulator continues to actively pursue retailers who it considers have acted in a misleading manner in relation to "was/now" price advertising. In the context of heavy discounting in the consumer goods retail sector, this serves as a further reminder to retailers to be cautious when advertising savings.
Further infringement notices
Outdoor Supacentre Pty Ltd (Outdoor Supacentre), trading as 4WD Supacentre has agreed to a court enforceable undertaking and paid $63,000 in fines following five infringement notices issued by the ACCC. During the key Christmas sale period in 2018/19, 4WD Supacentre, while advertising five camping and adventure products, implied that each product was currently available for a lower price than a previous sale price. These 'was/now' representations were made even though each of those five products had not been sold at the "was" price during the three-month period before each advertisement.
Outdoor Supacentre acknowledged in its court enforceable undertaking that its conduct was likely to have contravened section 29(1)(i) of the Australian Consumer Law, in that it made false and misleading representations with respect to price. Outdoor Supacentre agreed to an undertaking that it would not advertise any product using a two price comparison in a way that suggests the product was available from 4WD Supacentre for the higher price unless 4WD Supacentre sold or advertised the product at the higher price for a reasonable period prior to the advertisement being published. In addition, Outdoor Supacentre provided an undertaking that it would not advertise a "was/now" price comparison on non-identical products unless there is prominent disclosure of the non-identical product.
Outdoor Supacentre also agreed to publish corrective advertising on its website, and implement an Australian Consumer Law compliance program.
Determining the was/now price is not a simple task
Fundamentally, the use of was/now pricing represents to a consumer that they are to achieve a saving by purchasing the advertised product during the sale period. To avoid being in breach of the Australian Consumer Law, this saving representation must not be misleading or deceptive.
To reduce the risk that a was/now pricing representation is misleading, a retailer must ensure that consumers have been able to pay the "was" price for a reasonable period immediately before the sale. As to what is reasonable, the ACCC guidance on this issue suggest that it will vary from case to case and depends on such factors as the type of product, market involved, and historical frequency of price changes.
As a result, there is no clear answer to what is a "reasonable" period, and particular caution should be taken by retailers in markets where product discounting is common as regular or lengthy discounting can result in the discounted price becoming the regular price.
As to the future…
Interestingly, while retailer advertising of price and "was/now" pricing was not an enforcement and compliance priority for the Australian Competition and Consumer Commission in 2019, the ACCC actively pursued a number of retailers in this space in 2019, and now into the start of 2020. Prior to this, the previous notable Federal Court cases regarding was/now pricing were in 2012 and 2013.
The recent enforcement actions, together, with the case against Kogan Australia in relation to its was/now pricing scheduled to be heard in the Federal Court in March 2020, puts retailers on notice that this advertising method is receiving heightened scrutiny from the ACCC investigation teams.
With the ACCC compliance priorities for 2020 due to be released in the next month, it will be interesting to see if this area is a stated priority for 2020, and whether further penalties and cases are to come.