Retailers warned again on misleading price advertising

Another warning has been issued to all retailers to ensure that advertisements relating to price are not misleading. This follows an Australian Competition and Consumer Commission action against a furniture retailer.

"Consent injunctions were granted on Friday by Justice Drummond in the Federal Court, Brisbane, against Furniture Direct (MacGregor) Pty Ltd, and its managing director," ACCC Chairman, Professor Allan Fels, said today. The ACCC had alleged that Furniture Direct promoted a 'cost plus $5' sale on television and radio in Queensland during 1996.

"But inquiries showed that furniture was not sold on a 'landed cost' basis, and in fact had been marked up by approximately 30 per cent to cover various in-store costs," Professor Fels said.

"Consumers could reasonably expect that the price of items sold during the promotion would reflect the true landed cost to the retailer. "Retailers must be aware that when they use eye catching phrases such as 'cost price' they risk breaching the Trade Practices Act if they cannot substantiate their advertised claims."

The ACCC also alleged that Furniture Direct had used various advertising slogans such as 'cut out the middleman' and 'buy direct and save' in circumstances where a significant proportion of furniture sold was not in fact manufactured by Furniture Direct.

Businesses requiring information on advertising practices and the Trade Practices Act can contact their local ACCC office.

Further information Professor Allan Fels, Chairman, pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808