Furniture Direct faces ACCC action for alleged misleading price advertising

The Australian Competition and Consumer Commission has instituted legal action against Furniture Direct Pty Ltd, Furnelect Pty Ltd and the companies' director, Mr Monty Khoury, alleging false, misleading and deceptive conduct over a 'Store Cost Plus $1' advertising campaign for the Furniture Direct stores owned and operated by the companies.

The ACCC alleges that Furniture Direct Pty Ltd conducted an advertising campaign between about February and April 2001 which promoted a sale of furniture through stores owned by Furniture Direct Pty Ltd and Furnelect Pty Ltd in and around Brisbane at 'Store Cost Plus $1'. The promotion included television, radio and newspaper advertisements.

Some advertisements contained a fine print disclaimer: "store cost includes all store outgoings".

The ACCC alleges that the prices which Furniture Direct Pty Ltd and Furnelect Pty Ltd advertised were calculated by adding approximately 60 per cent to the prices paid for the items by the stores, plus one dollar.

It is alleged that Furniture Direct Pty Ltd breached section 52 of the Trade Practices Act 1974, which prohibits conduct that is misleading or deceptive, or is likely to mislead or deceive; and section 53(e) of the Act, which prohibits false or misleading representations about the price of goods. The ACCC further alleges that Furnelect Pty Ltd and Mr Khoury were knowingly concerned in, or party to, the alleged contraventions by Furniture Direct Pty Ltd.

The ACCC is seeking court orders including:

• declarations that the alleged conduct has breached the Act
• injunctions restraining the respondents from similar advertising conduct in the future
• refunds to affected consumers, of 30 per cent of the receipted purchase price for each item
• an order requiring the implementation of a trade practices compliance program
• costs.

A directions hearing is listed for 5 February 2002 in the Federal Court, Brisbane.