The Federal Court has held 'Was/Now' discount advertising by Prouds Jewellers Pty Ltd to be misleading in breach of the Trade Practices Act 1974.
In proceedings commenced in December 2006 the Australian Competition and Consumer Commission claimed that Prouds discount advertising of certain jewellery items in its mass distribution catalogues published to coincide with Valentine's Day and Mother's Day in 2006 contravened the Act.
The advertising was in the form of price comparisons such as 'Was $199 / Now $99.50' and appeared in Prouds' February 2006 Summer of Love catalogue and its May 2006 Love You Mum catalogue. Numerous jewellery items were advertised in this way in each of these catalogues. The case related to the 'Was/Now' price advertising of 17 items that appeared in both catalogues.
Justice Moore concluded that the 'Was/Now' advertising conveyed to consumers that the jewellery items had been offered for sale for a reasonable period immediately before the catalogue promotion at the 'Was' price. He also observed that: "The difference between those two ['Was/Now'] prices would be seen by the hypothetical consumer as the savings that would be achieved by him or her by purchasing an item during the sale period."
Justice Moore found that each of the 17 items had not in fact been offered at the 'Was' price in that period and concluded that the 'Was/Now' advertising of each of the items in both catalogues was misleading.
In reaching this conclusion he observed: "…the evidence, overall, plainly points to Prouds not being concerned about whether items in a promotional sale had been offered for sale at the 'was' price immediately before the promotional sale commenced."
ACCC Chairman, Mr Graeme Samuel, said the decision was an important warning to businesses who consistently conduct 'sale' promotions of the need for accuracy in advertising particularly in relation to price which is so important to consumers' purchasing decisions.
"Comparison price advertising is a common practice in a number of industries," Mr Samuel said. "The ACCC will carefully consider the judgment and its implications for those who engage in such conduct in a way that may mislead consumers. Advertised discounts must be real and not illusory.
"It is not enough for the seller to simply decide what would be a 'fair' higher price before discounting from that high price. If you make a was/now price comparison you must have genuinely offered the product at the 'was' price for a reasonable period immediately before your sale promotion."