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Furniture Retailers Pay Penalties For False Or Misleading “Was/Now” Price Comparisons

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Louise Wolf, Senior Associate, MST Lawyers

Plush –Think Sofas Pty Ltd (Plush), Koala & Tree Pty Ltd (Koala Living), ESR Group Holdings Pty Ltd (Early Settler) and Oz Design Furniture Pty Ltd have received infringement notices following the ACCC’s investigation into the industry’s use of ‘was/now’ price comparison advertising.  Each retailer was required to pay a penalty of $12,600.

The ACCC had reasonable grounds to believe that the retailers advertising falsely represented that consumers would save money because the ‘now’ price for various items of furniture was lower than the ‘was’ price.  In fact, the furniture items had either never been advertised at the ‘was’ price or in some circumstances had been advertised at the ‘was’ price for a relatively short period.

For example, a ‘Roller Ottoman’ was sold at a price of $539 with the words ‘save $360’, even though it was available for $449 immediately before the sale.  In another example, a chair was advertised with the words ‘$799, save $200’ when its usual price in the previous six months was $699. 

ACCC Commissioner, Sarah Court, said, “Consumers rely on comparative pricing to find the best deal available.  If there are no genuine savings, businesses are misleading consumers.” 

“The ACCC has taken this enforcement action to send a strong message to retailers that they must ensure that any claimed savings are accurate and based on a ‘before’ price which has been offered for a reasonable price when using comparison advertising.”  

This is not the first time that the ACCC has taken action for false or misleading price comparison advertising.  In 2012, the ACCC commenced action in the Federal Court against Jewellery Group Pty Ltd (Zamel’s).    The Federal Court and the Full Federal Court on appeal found that:

  • Zamel’s had not sold the item at or near the ‘was’ price, or had sold it in limited numbers at or near that price in the four months prior to the sale period; and
  • Zamel’s had a vigorous discounting policy outside of sale periods which meant that the ‘was’ price was rarely paid by a customer.

Zamel’s paid a penalty of $250,000 and was required to publish corrective notices in newspapers and on its website.  The jewellery retailer was also required to implement a trade practices compliance program and pay the ACCC’s costs. 

In comparison to Zamel’s, the four furniture retailers paid a significantly lower penalty, because they were issued with infringement notices.  However, this does not mean that the ACCC will not bring future actions in the Federal Court for this type of conduct. 

Since the Zamel’s case, penalties for breaching the Australian Consumer Law by making false or misleading representations have increased significantly.  For corporations, penalties will be $10 million or three times the value of the benefit received or $10% of the annual turnover of the corporation, whichever is greater. 

Retailers in all industries, not just furniture or jewellery, need to take care when including comparisons in their advertising or “on-sale” tickets.  The ACCC recommends retailers seek legal advice regarding price comparison advertising.  For advertising advice, email our Corporate and Commercial team or if you are a Franchisor, our Franchise team or call 8540 0200 to speak to one of our lawyers.