Bunnings Warehouse has reportedly pleaded not guilty to 45 charges brought against it in New Zealand, after the country’s consumer watchdog initiated legal action over allegations the hardware chain’s “lowest prices” promotions were misleading.
The New Zealand Herald reports Bunnings entered a “not guilty” plea in the Auckland District Court on Tuesday on charges relating to its advertising campaigns between July 1, 2014, and February 28, 2016.
In February, the Consumer Commission of New Zealand confirmed it had filed charges against Bunnings, which has 46 stores across the country, for misleading advertising, claiming the hardware busines “misled consumers by advertising the prices of its goods as being the lowest in the market”.
“The Commission alleges that Bunnings’ advertising at its stores nationwide along with advertising campaigns on television, radio, online, and in newspapers and catalogues gave an overall impression that it offered the lowest prices for its products, when this was not true,” the Commission said in a statement.
Each of the charges could carry a maximum penalty of $NZ600,000 ($790,000), reports Fairfax.
Bunnings NZ general manager Jacqui Coombes said in February the hardware retailer intends to “defend our highly competitive price guarantee”.
A spokesperson for the Australian Competition and Consumer Commission (ACCC) told Fairfax yesterday that the Australian watchdog would be watching how the New Zealand case plays out. The spokesperson said the ACCC had “previously considered” similar issues about Bunnings in Australia but had decided not to proceed with action.
SmartCompany contacted Bunnings for further comment and was provided with the company’s response to the charges, issued in February.
“We are disappointed with the Commerce Commission’s decision to file charges against us about our lowest prices advertising between July 2014 and March 2016,” Jacqui Coombes said in the statement.
“We would like to reassure customers that we will continue our lowest prices policy along with our comprehensive business processes and procedures operating behind the scenes to back this up.”
Test messaging before you release it, say experts
The Bunnings case is covered by a different framework of consumer law to that which operates in Australia, says Legal Vision principal and general counsel Ursula Hogben, but Australian businesses that want to make claims, particularly on price, are advised to check their messaging carefully.
“This area is regulated by consumer law, and the concern is around deceptive and misleading conduct,” Hogben says.
“You can’t say one thing clearly [in an ad] and then have contradicting terms and conditions.”
When making claims on price, Hogben advises any terms and conditions need to be very clear and easily found by customers, however, where these terms are exactly located on ads and websites isn’t as important as the fact that customers can identify and understand them.
“The ACCC has sensible tests on terms and conditions — mainly, it’s about the bold headline claim not being contradicted by the fine-print,” she says.
While a situation like Bunnings claiming it has the lowest prices would not likely centre on questions around if the statements constitute “puffery” under consumer law, Hogben says more outlandish claims often used by advertisers, like “World’s Best Pizza!”, might be found not to be misleading even though they cannot be proved.
For a business to get away with such “puffery” statements, “it has to be totally outrageous”, Hogben advises.
However, such outlandish claims become problematic if “people could believe it” and make a purchasing decision based off the message, says Hogben.
Michelle Gamble, director of Marketing Angels, says when planning marketing campaigns, SMEs should make sure their claims are “water tight”.
The costs of running a campaign that oversells or inflates an element of your business will also likely drag your business into the court of public opinion, Gamble says.
“I think particularly with online reviews now, say you claim to be one of the ‘world’s best’ [and] then you get rated really poorly online by clients, well, you’re so exposed there.
“It can quickly reveal what your services and quality are, and what’s going to travel is word-of-mouth.”
While there are risks in claiming you are a market leader, Gamble advises brands to think about how they do want to position themselves in the market, and avoid being too timid when selling the values of their business.
“I think we often have clients that are looking to own a position in the market, but they can be a little bit shy about the claims that they’re making. You’ve got to put yourself on the line,” she says.
“I think for successful companies, they’re the ones where you know what their market position is and what they want to own.”
However, director of InsideOut PR Nicole Reaney warns that any definitive claims, like “lowest” or “best”, could potentially lead to scrutiny from consumers and other competitors.
“[Businesses] are essentially setting themselves up for legalities and consumer disruption when expectations are not met. Other brands can so easily challenge these claims — and market their prices so quickly with digital and other marketing means,” Reaney advises.