By Claire Reilly
The ACCC has once again cautioned retailers against the perils of misleading advertising, issuing almost $20,000 worth of fines to a Victorian furniture retail chain.
Following the busy Christmas and post-Christmas sales period, the ACCC said the fines should serve as a warning to all retailers on the importance of accuracy in advertised sales and promotional materials.
“In the midst of the summer sales period this is a very timely reminder to all retailers that they must ensure that any advertised savings are genuine and not misleading or deceptive,” said ACCC chairman, Rod Sims.
The fines issued against the Furniture Galore chain of stores were related to the promotion of ‘on sale’ products. The store reportedly advertised goods at reduced prices, offering a supposed saving on the usual selling price.
However, “Furniture Galore admitted that it had not sold or genuinely offered those goods at the higher usual selling price for a reasonable amount of time immediately prior to making the savings representations or at all during the 16 months that the advertisements were published”.
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The ACCC said that this sort of advertising by retailers was a contravention of the Australian Consumer Law, which stipulates that “representations about savings, reductions or discounts must reflect real and true savings for consumers”.
“Two-price advertising is a powerful marketing tool designed to encourage consumers to make purchases during a sale period because the goods are cheaper than normal,” said Sims.
“Retailers who overstate or misrepresent the value of savings offered to consumers during special sales or promotions risk financial penalties or court action by the ACCC.”
The retailer in question was forced to pay three fines totalling $19,800, and publish corrective notices in all its stores, on its website, in a trade magazine and in the Herald Sun newspaper.
This news follows action taken by the ACCC against Harvey Norman in late 2011, which saw the retailer paying a $1.25 million fine for misleading advertising. While the penalty against Furniture Galore is significantly less, it is nonetheless a significant cost for a small retail chain of 13 stores.