Don't make your Christmas sale a liability

Don’t make your Christmas sale a liability

We all know that Christmas is the time for sales.  It’s critical to ensure that savings claims are accurate and able to be substantiated. Such claims include “% off” or “was/now” price claims.  The law in this area applies equally to bricks and mortar and online retailers.  This year the ACCC indicated that it was going to focus on savings claims made by retailers – and it did.

The ACCC enforces the laws regarding save claims because not only do they tempt and lure consumers, but misleading claims creates an unfair playing field between competitors.

Savings claims are great, after all, who doesn’t love a bargain?  But what happens when the savings claim is less than rock solid?

When the ACCC investigates a savings claims they can issue a substantiation notice.  Substantiation notices require the recipient to verify the claims they are making.  This can include providing evidence of advertising, details regarding dates of offers and when items were offered at full price (or the “was” price).

The ACCC advises business that a savings claim should only be available for a limited period of time.  If a reasonable period has elapsed and the merchandise is still “on sale” then the sale price effectively becomes the new established price and therefore, saying that the time is still on sale becomes misleading.   It is unclear at this point what the ACCC deems to be a “reasonable period” and may depend on a number of factors including the price of the merchandise, the volume of sales and the length of time that the merchandise was at full price.

If a save claim is incorrect it could constitute misleading and deceptive conduct and/or making misleading and deceptive statements.  Under the Australian Consumer Law, there are significant penalties for non-compliance which could include the ACCC requiring a party to pay a fine or enter in to an enforceable undertaking.

A couple of ways to ensure that you don’t get caught out is to:

  1. Have a clear set of advertising guidelines that your business can adhere to, ensure they are understood, implemented and monitored throughout your business, and
  2. Keep good records of your merchandise and its various price points.