Consumer advocates investigate spate of “Was/Now” retail claims

retail sales
NSW Fair Trading has issued substantiation notices to nearly half of the 78 traders they investigated, requiring them to back up claims that around 230 items labelled with “was/now” were made in good faith.

Consumer advocacy group Choice believes it’s a common enough phenomenon: retailers advertise the supposedly real savings that customers will gain when purchasing on-sale products. But recent complaints indicate that retailers may not always be telling the truth about the discounts they allege.

NSW Fair Trading Minister Matthew Mason-Cox said one retailer deceptively claimed a Canon inkjet printer “was $59, now $39”. However, due to a late delivery the printer was never sold at its original asking $59 price, rendering the retailer’s claim false.

“Traders were identified based on complaints data, as well as a co-ordinated internet scan to identify promotions on websites targeting Australian consumers,” the minister told the Sydney Morning Herald.

In NSW alone, fair trading officers launched investigations into 30 businesses, assessed over 150 discounted items and handed out over a dozen substantiation notices.

Currently, six traders were able to validate their was/now assertions, another six were still under investigation and one trader was sent an “education” letter to remind them of their obligations under the law.

Making false was/now claims can attract serious penalties under consumer law of up to $1.1 million.

In 2013, the Federal Court found jewellery maker Zamel guilty of misleading its customers with was/now price claims.

The retailer falsely advertised several items it sold “was $279, now $149” despite the fact they were never actually sold at its original advertised price. Zamel was fined $250,000.

With the Christmas season soon approaching, retailers are encouraged to comply with consumer protection laws or face similar sanctions.

The temptation of making a quick sale isn’t worth a knock on the door from consumer watchdogs.

Implement our Competition and Consumer Protection course today.

Source: Sydney Morning Herald

Competition and Consumer Protection: Red Bull may not give you wings after all

Coffee cup  

Red Bull is alleviating the effects of false advertising by agreeing to pay over $15 million.

Red Bull’s marketing tactics and advertising campaigns falsely claim to give consumers superpowers.

Competition and Consumer Protection laws are in place to ensure products on the market are being sold fairly and that consumers are not being misled.

In this case, the accuser believes that Red Bull’s slogan “Red Bull gives you wings” was misleading because they were not able to fly after a few sips.

The accuser who has been regularly consuming Red Bull energy drinks since 2002 has realised that the enhanced performance which the energy drink claims to give consumers is non-existent and hasn’t helped him become a better athlete in any shape or form. In fact their consistent marketing campaigns throughout print, TV and internet channels misrepresent the energy drink that has no greater benefits than drinking a cup of coffee.

The court agreed that Red Bull’s strong focus on being a superior source of ‘energy’ was inaccurate and unfairly deceiving consumers. The court found Red Bull guilty of deceptive and fraudulent practices.

So what are the consequences of breaching the Competition and Consumer Protection laws?
In the US, if the settlement is approved, all consumers who bought at least one can of Red Bull in the past 10 years will be reimbursed with either $10 or two free Red Bull products – bringing Red Bull down to $6.5 million in just a matter of days.

Does your organisation abide by competition and consumer protection laws when advertising its products and services?
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Bearings manufacturer fined $3m for price fixing

price fixing

Bearings manufacturer NSK Australia has been fined AUD$3 million for price fixing.

The Federal Court imposed the fine after the Australian Competition and Consumer Commission (ACCC) investigated the case.

NSK Australia holds around 10-13% of the $400 million Australia bearings market. Bearings are an essential component in mechanical items, including motor vehicles, mining conveyors, household electrical items and farm machinery.

According to the ACCC, bearings prices were hiked by four per cent in May 2008 and by 10 per cent in February 2009. The price fixing activity primarily affected aftermarket bearings customers – those who purchased bearings for maintenance and repair of motor vehicles, household and industrial machinery.

How it happened
Three senior Japanese executives from NSK Australia, Nachi Australia and Koyo Australia participated in the cartel conduct. They held regular group meetings in Sydney and Melbourne to discuss pricing plans during the nineties. This led to the formation of the Southern Cross Association cartel in 2000. The cartel remained undiscovered for over a decade.

“Cartels cheat customers and other businesses. The ACCC will continue to tackle cartel conduct with the full force of the law,” ACCC Chairman Rod Sims said.

Although the fine imposed on NSK Australia is significant, it reflects a discount that was granted after it cooperated with the ACCC’s investigation. Koyo Australia also faced a $2 million penalty in October last year. Nachi is yet to receive any penalties apart from significant reputational damage.

The Court also ordered NSK Australia to implement a competition and consumer law compliance training program throughout its organisation.

Contact us for more information on our Competition and Consumer Protection online training course.

Source: ACCC, $3 million penalty for bearings cartel conduct