Court orders Dell to publish corrective advertisements

4 July 2002

The Federal Court has declared that from about June 1994 to 30 November 2001, the computer giant, Dell Computer Pty Ltd published advertisements in contravention of the Trade Practices Act 1974. The advertisements did not make clear to customers that they had to pay a compulsory delivery charge on top of the advertised price for Dell's computers.

The court ruled that these advertisements were misleading or deceptive in breach of Section 52 of the Act and made injunctions restraining Dell from advertising in that manner in the future.

However, the court found that there was no contravention of sections 53(e) and 53C, dealing with a false or misleading representation with respect to the price of goods or services and specifying the cash price of goods or services, as alleged by the ACCC. The ACCC will look further at these matters.

The court also ordered Dell to publish a corrective advertisement in major newspapers in each capital city of Australia explaining how Dell misled its customers. The court ordered Dell to pay the ACCC's costs of the proceedings.

Dell commonly advertises by full-page advertisements in popular computing magazines and in the major newspapers and on the Internet.

In the advertisements in question, prices were prominently displayed next to images of Dell computers. But most customers could not purchase the computers at these prices. They were forced to pay an additional delivery charge of up to $99 (the amount varied according to model purchased). The delivery charge was compulsory as Dell is a direct marketer without a shop front and its computers are only available by way of delivery by Dell to its customers.

The ACCC's court action followed complaints from consumers that Dell computers could not be purchased at the advertised price, and in fact were in some cases about $99 dearer than advertised.

The Dell advertisements in question did include references along the lines of "delivery additional" or "additional delivery charge of up to $99" either next to the advertised price or in the fine print at the bottom of the advertisement. But the court found that these references did not make clear to customers that delivery was compulsory and could lead customers to think they could avoid a delivery charge by collecting the computer themselves. In reality, most customers had no choice but to have the computers delivered to them at a cost.

"This decision makes clear that advertisers need to be upfront about additional costs", ACCC Chairman, Professor Allan Fels, said today. "Price is a powerful drawcard. It lures the reader in. Prices must be accurate and unambiguous or else you run the risk of breaching the Trade Practices Act. Important pricing information should be precise and not confined to the fine print. It is never going to have the same impact as bold prices appearing next to products being advertised. Subsequent clarification of prices in fine print are scant comfort to consumers drawn in by prominent price headlines. They will be closely scrutinised by the ACCC and it will continue to take a strong stance on fine print advertising in the future".

Release number: 
MR 165/02
ACCC Infocentre: 

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