Mobileworld Communications (Aust) Pty Ltd has given the Federal Court undertakings after the Australian Competition and Consumer Commission alleged it used misleading and deceptive conduct and bait advertising in a mobile telephones promotion.
The ACCC had alleged the conduct occurred in advertising in a Crazy John's newspaper advertisement placed by Mobileworld on 2 July 1997 featuring the NEC Sportz Digital, the Ericsson 218, the Nokia 2010 (incorrectly described as model 2110) and the Motorolla 1-888 for sale at $49 with a connection fee of $65 and 12 months access at $20 per month.
At the time of the sale the company had either none or limited numbers of the advertised phones at each of its 10 Crazy John stores. In settling the proceedings, the company gave undertakings to the Federal Court in respect of future advertising and consented to court orders.
They stipulate that the company will not at any time advertise digital cellular telephones at a special price unless reasonable efforts are made by the company to have sufficient stock at each of its relevant stores referred to in the advertisement. The company also undertook to detail the actual number of units held by a store where less than a specified stock base is held at a store. Further the company will maintain a 'rain-check' policy.
In addition to the undertaking provided to the Court, the company consented to orders requiring it to: maintain a trade practices corporate compliance program with annual reports to the ACCC; place within seven days a public notice in the Herald Sun newspaper acknowledging insufficient stock was held and apologising for any inconvenience to persons who responded to the advertisement and/or were not supplied with one of the four advertised telephones; and pay the ACCC costs.
In the case at hand, the company found itself without sufficient stock, when an order for discontinued phone models, placed the day before publication of the advertisement could not be filled by the company's supplier. The ACCC acknowledges that Mobileworld, when informed of the ACCC's concerns, did act to contact and compensate customers, who purchased a more expensive telephone package than that advertised.
'The matter was a clear reminder to companies of the need to ensure sufficient stocks are available before advertising a sale item and to ensure that a policy to provide a 'rain check' is in place,' ACCC Chairman, Professor Allan Fels, said today. 'It is important to get things right before an advertisement goes to print and in the event that something goes wrong, to have in place procedures to either satisfy demand through a 'rain-check' (ie offer of later supply) or the provision of equivalent goods at the same price as those advertised.