Retailer hit with big fine for false discount claims

A jewellery retailer has been fined $220,000 after pleading guilty to misleading customers with ads falsely claiming that products had been hugely discounted.

A jewellery retailer has been fined $220,000 after pleading guilty to misleading customers with ads falsely claiming that products had been hugely discounted.

Carrerabenz Diamond Industries used the promotions to help it sell diamonds and diamond jewellery at exhibitions held in Sydney, Melbourne, Adelaide and Perth in early 2003.

In each it advertised products with a “usual marked price” and a much lower “crazy price,” in some cases purporting to offer discounts as high as 233%.

The company admitted the discounts were bogus after 27 charges of misleading and deceptive conduct were laid by the Australian Competition and Consumer Commission in the Federal Court.

In its guilty plea, Carrabenz acknowledged that the items had not previously been made available for sale in Australia or offered at the “usual marked price” as claimed.

Federal Court justice John Logan fined the company a total of $220,000 for the breaches. The large fine was needed to deter others who might be tempted to make false claims, he said.

Kathryn Edghill, a trade practices expert with Addisons Commercial Lawyers, says the ACCC has increased its focus on advertising claims by retailers.

“The ACCC is really cracking down; there have been quite a few cases recently,” Edghill says. “They are looking very closely at discounts and doing comparisons of prices to make sure customers aren’t being misled.”

In this case the company’s “crazy price” was not a low price at all, but Edghill says even where a discount meets the letter of the law – for example, offered at a usual price one day and then a “new low price” thereafter – retailers would do well to be cautious.

“You would want to be careful in the current environment. If you put something on sale and advertise it as such, you must be sure it is an actual lower price. It is just a matter of being sensible and conservative,” Edghill says.

 

Read more on the ACCC

 

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