Watchdog's Christmas warning to retailers: Don’t promise what you can’t deliver

Briefly raising prices, then lowering them for a "sale" - not on

The Commerce Commission is reminding retailers of their responsibilities under the Fair Trading Act as the Christmas shopping season gathers pace.

With increasing numbers of shoppers heading online to buy gifts, the commission is warning online retailers that they and their staff should be aware of the Act.

“The Fair Trading Act prohibits false and misleading information being provided to consumers. That means all businesses – real or virtual – need to ensure the information they give customers is accurate about all aspects of their product or service,” commission competition manager Greg Allan says.

“New Zealanders are great watchdogs for misleading or deceptive claims made by businesses. The commission receives over 10,000 complaints a year and around 70% are about possible breaches of the Fair Trading Act, so all retailers should make sure they understand their obligations and deliver on them.

“In short, don’t promise what you can’t deliver because it’s likely the commission will hear about it.”

Make sure your delivery dates are accurate
Online retailers failing to deliver goods by the promised date is a common fair trading complaint over the holiday period, Mr Allan says.

“We have already received our first complaints this Christmas about online gifts not turning up by the promised date.

“We also commonly hear from people buying Christmas presents online and then being told the goods are not available just before Christmas.

“Retailers, particularly those trading online, must be very careful about promising to deliver goods by a certain date at one of the busiest delivery times of the year,” Mr Allan says.

Comparing apples with apples in pricing
When comparing a "special" price with a previous price, such as "was $50, now only $35", retailers must be careful about the previous price. As a general rule, a product should have been available for sale at that price for a reasonable time before the price reduction.

Raising prices and quickly lowering them in order to claim larger "savings" is misleading and would breach the Fair Trading Act.

Is it really made in New Zealand?
Boosting sales by misleadingly claiming New Zealand-made status is a breach of the Act. Retailers need to be aware that there are a number of considerations to think through when labelling a product as "New Zealand made".

Help is available
To help businesses comply with the Fair Trading Act the Commission publishes online fact sheets and guidance at www.comcom.govt.nz/fair-trading-act-fact-sheets. T

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3 Comments & Questions

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Are B2B services covered under the Fair Trading Act? In other words, if I engage a professional consultancy business and find they have misled my company in their advertisement, can I persecute them?

Cheers.

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You can probably persecute (annoy or trouble persistently) but you may wish to prosecute instead. Persecuting, may have the boot on the other foot and them prosecuting you.

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Also, yes, currently the Fair Trading Act covers business-to-business transactions. (There may be a change next year with the consumer law reform bill, where b2b transactors can choose to opt out.)

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