Companies have been put on notice that the Australian Competition and Consumer Commission will soon prosecute misleading cash-back promotions.
The number of misleading cash-back offers has now reached a point that the ACCC has no other option but to prosecute future offenders, ACCC Chairman, Professor Allan Fels, said today. This follows a further* investigation of a cash-back offer which failed to disclose the full conditions on the packaging visible to consumers buying the products.
Here, Danone International Brands (Australia) Pty Ltd [the Australian marketing company for Griffins biscuits] promoted a $3 cash-back offer through a sticker on the outside packaging of 500g packets of Griffins Variety Sampler biscuits. The ACCC considered that the sticker told consumers they would receive $3 after buying the packs, Professor Fels said.
But conditions about the offer which were inside the packs revealed that the cash-back claim had to include three full barcodes from any packets in the Griffins range excluding the 500g Variety Sampler pack. The ACCC was therefore of the view that the promotional sticker was misleading, breaching the Trade Practices Act.
Whilst on an individual basis, these misleading cash-back offer investigations may seem trivial, their growing popularity as a promotion indicates that consumers respond and are suffering harm when misled. Over the life of a promotion, consumers may spend large amounts to get a small return. Many forget to redeem the offers, or quit the promotion when they realise the full conditions. The latter may drive customers away from a product in future.
The ACCC has issued numerous warnings to retailers and suppliers about fully disclosing conditions of offers. In the Danone case, the company realised its error early and came to the ACCC with a full and frank admission of its conduct. It also took action to remove the stickers from packets in supermarket shelves and in its warehouse and to honour customer redemptions which it had received which included barcodes from the 500g variety packs.
After talks with the ACCC, Danone undertook to adopt a more liberal redemption policy and to publicise this policy in the newspapers. It agreed to honour any further claims which it may receive from consumers who relied upon the promotional stickers and purchased three packets of Griffins biscuits where one or more of these packets included the Variety Sampler pack. Only one such claim will be accepted per household. Danone also has undertaken to implement a trade practices corporate compliance program.
Danone is to be commended on its quick reaction. Resolution of such problems is not cheap - Danone's mistake has already cost the company about $50,000 in altering packaging and otherwise cancelling the promotion. In addition, the company faces the expenses of public notices in national print media.
The ACCC is now prepared to move to Court because some sections of business have not been prepared to heed our warnings. The ACCC considers that many misleading promotional offers are readily avoidable especially if companies have in place corporate compliance procedures to vet promotional material.
*Action has been taken against Gillette, L'Oreal, Johnson & Johnson, Arnotts, Sancella and Danone
The number of misleading cash-back offers has now reached a point that the ACCC has no other option but to prosecute future offenders, ACCC Chairman, Professor Allan Fels, said today. This follows a further* investigation of a cash-back offer which failed to disclose the full conditions on the packaging visible to consumers buying the products.
Here, Danone International Brands (Australia) Pty Ltd [the Australian marketing company for Griffins biscuits] promoted a $3 cash-back offer through a sticker on the outside packaging of 500g packets of Griffins Variety Sampler biscuits. The ACCC considered that the sticker told consumers they would receive $3 after buying the packs, Professor Fels said.
But conditions about the offer which were inside the packs revealed that the cash-back claim had to include three full barcodes from any packets in the Griffins range excluding the 500g Variety Sampler pack. The ACCC was therefore of the view that the promotional sticker was misleading, breaching the Trade Practices Act.
Whilst on an individual basis, these misleading cash-back offer investigations may seem trivial, their growing popularity as a promotion indicates that consumers respond and are suffering harm when misled. Over the life of a promotion, consumers may spend large amounts to get a small return. Many forget to redeem the offers, or quit the promotion when they realise the full conditions. The latter may drive customers away from a product in future.
The ACCC has issued numerous warnings to retailers and suppliers about fully disclosing conditions of offers. In the Danone case, the company realised its error early and came to the ACCC with a full and frank admission of its conduct. It also took action to remove the stickers from packets in supermarket shelves and in its warehouse and to honour customer redemptions which it had received which included barcodes from the 500g variety packs.
After talks with the ACCC, Danone undertook to adopt a more liberal redemption policy and to publicise this policy in the newspapers. It agreed to honour any further claims which it may receive from consumers who relied upon the promotional stickers and purchased three packets of Griffins biscuits where one or more of these packets included the Variety Sampler pack. Only one such claim will be accepted per household. Danone also has undertaken to implement a trade practices corporate compliance program.
Danone is to be commended on its quick reaction. Resolution of such problems is not cheap - Danone's mistake has already cost the company about $50,000 in altering packaging and otherwise cancelling the promotion. In addition, the company faces the expenses of public notices in national print media.
The ACCC is now prepared to move to Court because some sections of business have not been prepared to heed our warnings. The ACCC considers that many misleading promotional offers are readily avoidable especially if companies have in place corporate compliance procedures to vet promotional material.
*Action has been taken against Gillette, L'Oreal, Johnson & Johnson, Arnotts, Sancella and Danone