A Western Australian bicycle retailer, Merja Pty Ltd, trading as Morley Cycles, has admitted it misrepresented potential savings available to consumers when advertising the sale prices of its bicycles.
In an 8 page colour catalogue distributed in some Perth suburbs in October 2006, Morley Cycles advertised the sale of a number of different styles of Mongoose and Gemini bicycles at specified prices.
The catalogue advertised a "was" price and a lower sale price for the bicycles. The Australian Competition and Consumer Commission was concerned that Morley Cycles had advertised the "was" price when it had not sold any bicycles at the higher price.
When the ACCC raised these concerns, Morley Cycles admitted the catalogue was incorrect, as at no time preceding the publishing of the catalogue had Morley Cycles actually sold those particular bicycles at the advertised "was" price. In the ACCC's view, the representations were likely to have contravened the consumer protection provisions of Trade Practices Act 1974.
Morley Cycles cooperated fully with the ACCC and immediately took action to ensure incorrect comparative price advertising would not occur again. Morley Cycles has given court-enforceable undertakings that it will:
- not use "was" prices in future advertising and marketing campaigns unless those products had been previously made available for sale to the public at that "was" price for a reasonable period of time,
- cause a corrective notice to be delivered to households to which the previous catalogue was sent advising consumers of the incorrect pricing representations, and
- implement trade practices law compliance training for all staff and a corporate complaints handling system to ensure similar potential breaches of the Act do not occur in the future.
"Businesses need to be careful when they are putting together advertising material to ensure all pricing claims can be substantiated," ACCC Chairman, Mr Graeme Samuel, said today.
"This action follows repeated calls by the ACCC for businesses to be particularly wary when making "was/now" pricing claims and, in particular, that the "was" price is genuine so that consumers are not being misled about potential savings.
"The ACCC will continue to monitor advertising of this nature to ensure compliance with the Act," Mr Samuel said.