Harvey Norman undertakings after catalogue advertising errors

30 November 1995
"In the retailing frenzy that occurs from October to December each year, catalogue advertisers in particular must take the time to get it right," Australian Competition and Consumer Commission* Chairman, Professor Allan Fels, warned today.

"If they don't, not only will they risk losing their customers but they also run the risk of the ACCC taking action against them."

He was commenting on court-enforceable undertakings given by retailing giant Harvey Norman Holdings Ltd ("Harvey Norman"), the hub of the Harvey Norman franchise retailing empire, to the ACCC after an investigation into the publication and distribution of a Harvey Norman catalogue which included more than 20 errors.

The catalogue errors included illustrations of sale items with incorrect accessories or functions or claims that packages contained particular features which were not, in fact, available on those models.

"The ACCC alleged misleading or deceptive conduct by Harvey Norman because it continued to distribute the catalogue without correcting all known errors.

"The ACCC found that in some country areas no corrective advertising was run in local newspapers. It alleged that in the three stores it sampled there were either no corrective advertisements at all or those that were displayed were inadequate. Some sales staff were unaware of the errors.

"This is not good enough," Professor Fels said. "Obviously mistakes are occasionally made but there is no excuse for doing little or nothing when an error is detected. Apart from trade practices implications, it's just not good business."

Through the undertakings, Harvey Norman has agreed to improve its handling of all forms of advertising, corrective advertising, and consumer complaints.

"An important part of the undertakings from the consumer's perspective is that Harvey Norman will monitor customer complaints so that it can more effectively identify and correct systemic problems. Harvey Norman will appoint a Customer Complaints Manager whose functions are to include monitoring the progress of all complaints made against Harvey Norman and its franchisees. Harvey Norman will also institute a complaint handling system that will satisfy the requirements of the Australian Standard AS4269-1995 (Complaints Handling).

"The Commission's intervention will be of benefit to Harvey Norman, making it more responsive to the needs of its customers. Harvey Norman is yet another large organisation which has been required as part of a settlement with the ACCC implement a compliance program and educate its staff, thereby reducing the risk of breaching the Trade Practices Act.

"These undertakings are unusual in that they will eventually include the participation of all of the people who operate franchises within Harvey Norman stores.

"Failure of those franchisees to comply with the requirements of the undertaking may result in the termination by Harvey Norman of their franchise.

"The Australian Competition and Consumer Commission will continue the work of the Trade Practices Commission in protecting the rights of consumers. The Commission's publication, Qualifications in catalogue advertising - a guide for retailers, should be part of all catalogue advertisers essential reading."
Release number: 
MR 012/95