Misleading And False Claims Not On Shopping List
Issued 4 December 2003-04/071
Misleading and false claims not on Christmas shopping list
The Commerce Commission is reminding retailers of their responsibilities under the Fair Trading Act as customers hit the shops for the holiday season.
"At this time of year when Christmas and holiday spending boosts retail sales, businesses need to be more aware than ever of their responsibilities to give customers accurate information," said Commission Acting Chair, Paula Rebstock.
"The Fair Trading Act prohibits misleading and deceptive conduct in trade and is designed to protect both consumers and law-abiding businesses."
With Christmas promotions and other special holiday offers, the Commission is concerned that purchasing decisions are not prejudiced by misleading or false claims.
Availability of goods advertised
The Act requires businesses to supply goods or services at the advertised price for a reasonable (or stated) period and in reasonable quantities. Advertising goods and services that are unavailable in order to lure customers into a shop is known as 'bait advertising' and is a breach of the Act.
Fine print must not be used to conceal important information which would be critical to a customer's decision to buy goods or services, or to modify a claim being made in 'big print' or headline advertising. If the overall impression given by an advertisement is misleading, information contained in fine print does not protect a business from prosecution under the Act.
When comparing a 'special' price with a previous price, such as 'was $50, now only $29.95', customers must not be misled about the earlier price. As a general rule, a product should have been available for sale at that price for a reasonable time before the price reduction. Raising prices and quickly lowering them in order to claim larger 'savings' is misleading and would breach the Act.
Delivery of goods
The promise of free delivery of goods can be an important inducement for customers to purchase a product. Any conditions on an offer to deliver should be made clear - such as free delivery only within the central city, or only on goods over a certain value. It is deceptive to add the cost of delivery into the price and then claim the delivery is free.
Offering gifts and prizes
When running competitions and other promotions offering gifts or prizes, all conditions that apply, including any relevant time limit, must be clearly stated. The gifts and prizes must also be described accurately, and customers should not be misled into thinking that what they stand to gain or win, or their chance of winning something, is better than it actually is.
Warranties and guarantees
Under the Fair Trading Act, it is illegal for businesses to mislead consumers about their rights under the Consumer Guarantees Act. The terms of any guarantee or warranty provided are additional to a customer's rights under the Consumer Guarantees Act, and the guarantee or warranty should make that clear. Businesses cannot attempt to limit their liability to their warranty or guarantee.
For more information on misleading or deceptive practices under the Fair Trading Act, the Commission's publication 'A Guide for Advertisers and Traders' is available to download at http://www.comcom.govt.nz/publications/publist.cfm.