Promoters and companies considering using 'cash-back' offers to encourage product purchase have been warned to fully disclose important conditions.
"The ACCC has taken action recently against three promoters of cash-back offers where consumers only discovered restrictive conditions after they had bought product and opened the packaging," ACCC Chairman, Professor Allan Fels, said today.
A Federal Court action has just concluded against Marigny (A/sia) Pty Ltd, trading as L'Oreal, over a $6 cash-back offer for L'Oreal Excellence Imedia Creme hair care product that was promoted through national stores such as Coles, Woolworths, Big W, Target as well as approximately 3,000 pharmacies.
The offer to consumers was made on a label attached to a card inserted into the product's packaging. While the $6 cash-back offer was visible, the promotion's important conditions- including a limit of one per household - were concealed within the packaging.
On 1 August 1996 the Federal Court granted interim injunctions which included restraining L'Oreal from promoting the sale or supply of products with the cash-back card; a requirement to write to wholesalers and retailers telling them of the Court action and its effects; publishing advertisements to ensure consumers knew the offer would be honoured regardless of the number of products purchased; and conducting compliance checks to ensure that the Court Order was being complied with. The Federal Court has now declared that L'Oreals cash back promotion breached sections 52 and 53(g) of the Trade Practices Act, dealing with misleading and deceptive conduct.
In another instance, the ACCC has accepted enforceable undertakings by the manufacturer of Libra Cotton tampons, Sancella Pty Limited, following concerns about the companys recent $3 cash-back promotion.
Again, the ACCC felt the promotion misled, or was likely to mislead, consumers as a sticker attached to the packaging of Libra Cotton tampons in super, regular and mini sizes offered the money if a consumer $3 sent a barcode from the products. Concealed on the reverse of the sticker were conditions which included an expiry date of the promotion and that only one claim per person would be accepted.
In this case, the company moved quickly to resolve the problem. It is removing the promotional stickers from all product still on supermarket and pharmacy shelves. It will write to each of 9,700 consumers who have made a cash-back claim and invite them to make a claim for any additional entitlements; offer a free product to each of these consumers if they cannot now produce the barcode(s); and honour any multiple claims for cash-back payments received.
"A further instance, by Carter-Wallace (Australia) Pty Ltd concerned a $2 cash-back offer for Aapri Foaming Wash Gel. Again the promotional material with the product did not adequately disclose that the $2 offer was limited to one claim per household. All claims will now be honoured.
"The ACCC is noticing a trend of such 'cash-back' offers which inadequately important disclose conditions and warns promoters that it is prepared to take swift action to stamp out the practice. Cash-back promotions may encourage consumers to buy multiples of the product. If conditions are not disclosed, these consumers may be disadvantaged," Professor Fels said.
These promotions are becoming more popular and the ACCC obtained consent orders in the Federal Court earlier this year in another matter dealing with a cash-back offer by Gillette involving shaving gels and antiperspirant deodorants. In fact, the present promotions are the third and fourth instance where the ACCC believes companies making or promoting cash-back offers did not fully inform consumers of all conditions. Companies must be aware of their responsibilities to provide all information necessary to enable help consumers make informed decisions.
Professor Fels said companies and promoters considering these campaigns should carefully check that the packaging used did not mislead consumers in any way about their rights.
"Important conditions must be clearly visible to consumers before they open any packaging of the product," he warned.
"Recalls to bring packaging up to the mark is expensive, as are the legal expenses and the cost to a company's reputation."
