Full Federal Court confirms false or misleading representations by Zamel's

29 November 2013

The Full Federal Court has today upheld the decision of Justice Lander that the Jewellery Group Pty Ltd (Zamel’s) made false or misleading representations in contravention of the Trade Practices Act 1974 (TPA) by its use of two price advertising in catalogues and a flyer.

In August 2012, Justice Lander in his judgment found:

  • Zamel’s made false or misleading representations in relation to 44 items of jewellery that appeared in its May 2010 catalogue and up to 4 other catalogues from November 2008, by its use of two price advertising such as Was $275 Now $149 or $99 $49.50.
  • The catalogues were directed to consumers who were unaware of their ability to obtain discounts outside Zamel’s sales periods.
  • The two price statements conveyed to those consumers that they would save the difference between the two prices if the jewellery item was purchased during the sale period when that was not the case.
  • Those consumers would not have made the saving represented because Zamel’s had not sold the item at or near the ‘was’ or ‘strikethrough’ price, or had sold it in limited numbers at or near that price, in the 4 months prior to the sale period.
  • Zamel’s had a vigorous discounting policy outside sale periods which meant the ‘was’ or ‘strikethrough’ price was rarely paid by a Zamel’s customer.

In January 2013 Justice Lander imposed a penalty of $250,000 on Zamel’s in relation to the May 2010 catalogue, declared Zamel’s had engaged in conduct in contravention of the TPA and ordered Zamel’s to publish corrective notices, implement a trade practices compliance program and pay the ACCC’s costs of the proceedings. These orders were stayed until the determination of Zamel’s appeal.

“The ACCC welcomes this decision as it provides further guidance on the application of the law in the context of two price advertising,” ACCC Chairman Rod Sims said.

“The Full Federal Court has confirmed that Zamel’s, a significant player in jewellery retailing, took advantage of consumers and misled them about the level of savings they would achieve by purchasing items during catalogue sales.”

Justice Katzmann of the Full Federal Court observed “The representations were plainly intended to make the reader think that he or she would receive not just a discount, but a particular discount in the price of the marked goods. The clear invitation was for the consumer to subtract the ‘now’ price from the ‘was’ price or the ‘sale’ price from the ‘strikethrough’ price as the case may be.”

“This outcome serves as a warning to all retailers that the inappropriate use of two price advertising can mislead consumers and contravene consumer protection laws,” ACCC Chairman Rod Sims said

*On 1 January 2011 the Trade Practices Act 1974 was renamed the Competition and Consumer Act 2010

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265/13
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