Advertisements themed on 'Rent Two, Get One Rent Free' have been declared to be misleading and deceptive by the Federal Court.
Justice French made orders by consent against Thorn Australia Pty Ltd (trading as Radio Rentals in all states and territories other than South Australia).
Justice French found that Radio Rentals engaged in misleading and deceptive conduct in its 'Rent Two, Get One Free' advertising campaign that appeared throughout Australia in late 2002.
The Australian Competition and Consumer Commission instituted proceedings against Thorn Australia Pty Ltd in May 2003.
In October and November 2002, Radio Rentals ran a the campaign which included extensive television and radio advertising, a distribution of almost two million catalogues to households throughout Australia, internet advertising and a variety of in-store promotions.
The television commercials claimed that consumers could rent any two Radio Rentals products and get a third one rent free.
However, Radio Rentals failed to sufficiently disclose that a number of important terms and conditions were attached to the contracts. These included:
- the price and offer was based on an 18 month consumer rental agreement on selected stock;
- the offer was available only whilst the consumer continued to rent the other two items; and
- the free rental for the third item was for the item with the lowest monthly rental.
The court declared that the television commercials advertising the 'Rent Two, Get One Rent Free' campaign were misleading and deceptive or were likely to be misleading or deceptive, in breach of section 52 of the Trade Practices Act 1974 .
The court also ordered:
- an injunction restraining Thorn Australia Pty Ltd in its television advertising from failing to give due prominence or display for a sufficient period of time, or in a clearly legible or easily comprehensible form particular terms and conditions
- Thorn Australia to publish corrective notices on its website and in its next catalogue and broadcast a corrective television advertisement on 12 television stations
- Thorn Australia Pty Ltd to implement a trade practices compliance program and
- Thorn Australia Pty Ltd to pay the ACCC's costs in relation to the s52 issues.
The ACCC had also alleged that Radio Rentals' separate 'Rent, Try, Buy' campaign had contravened section 53C of the Act which deals with specifying the cash price of goods and services. However the court found that there was no contravention of section 53C.
"This decision confirms again that businesses need to tell the whole story about terms and conditions associated with offers", ACCC Chairman, Mr Graeme Samuel, said today.
"Failing to give due prominence in advertisements to the terms and conditions of an offer can be a costly exercise when a business has to correct that advertisement. The ACCC will continue to monitor advertisements, and take necessary action, to ensure advertisers are upfront about important terms and conditions.
"Advertising plays an important role in assisting consumers to make an informed choice and it is imperative that all advertising should contain sufficient information so that consumers are not mislead or deceived about important terms and conditions".