Harris Scarfe Australia Pty Ltd, has admitted to the Australian Competition and Consumer Commission that representations in its promotional advertising may have misled consumers
The admission is part of court-enforceable undertakings that Harris Scarfe has given to the ACCC.
"Harris Scarfe operates 21 retail department stores throughout South Australia, Victoria, and Tasmania", ACCC Chairman, Mr Graeme Samuel, said today.
"Over a six-month period at the end of 2003, Harris Scarfe made certain representations on a number of items in its catalogues in relation to pricing. The catalogues were distributed to the public in both printed and electronic form by letter box, website, and direct e-mail.
"The representations claimed a saving, expressed as 'save $X' and a higher price to which items would revert after the particular promotion, expressed as "after the sale $X'.
"The advertised items included boots and shoes, handbags, cutlery, and perfume.
"As a result of consumer complaints,* the ACCC undertook an investigation into Harris Scarfe’s catalogue advertising and raised its concerns with the company. It became apparent that in the case of 'save $X', the company had used a formula to create a price which it believed reflected the regular price and used this to establish an alleged saving.
"Further, in the case of“'after the sale $X', certain items did not revert to a higher price as claimed, thereby exaggerating the nature of the savings during the sale period. Not all the items were in fact sold at the claimed after the sale price, or were not sold in any significant quantities, either because the price did not rise or because there was little or no stock of those items.
"The ACCC believed that the representations may have misled consumers in breach of sections 52 and 53(e) of the Trade Practices Act 1974. The company agreed to immediately stop the conduct".
Within the next 30 days the company will be placing public notices in nine newspapers circulating in three States to express its sincere apologies to all consumers affected.
Further, to ensure that this does not happen again, Harris Scarfe has undertaken to implement a robust trade practices compliance program, including extensive training, which will be undertaken by all staff and management. Harris Scarfe has agreed that the program will be maintained for a period of three years and will be subject to external audit.
"Consumers shop around and compare prices", Mr Samuel said. "This makes it all the more important that advertised prices must be honest and accurate.
"The courts have made it clear in previous litigation by the ACCC that when a business tells consumers they will receive price savings, those consumers will expect that the price offered is less than the price they would have paid at that same business before the promotion began. If the claimed saving is not genuine the business runs a serious risk of breaching the Trade Practices Act.
"To assist retailers, the ACCC is preparing a revised guide to safety in price comparison advertising. This will be available free from all ACCC offices and from the ACCC website", Mr Samuel said.