Word of Advice

17 December 2007

Season of the sales

Pre-Christmas sales, Boxing Day sales, New Year’s sales… phew! You can hardly afford not to buy things with the multitude of sales around at this time of year. But with so many shops promoting all kinds of sales during the summer months, how do you know you’re getting a real bargain?

The Fair Trading Act prohibits misleading and deceptive conduct by traders. The Act has an impact on what traders can state about the goods and services they offer “on sale”. It covers misrepresentations made in brochures or leaflets, in store displays and signs, as part of a sales pitch, and in TV, radio, newspaper and other advertisements.

False or misleading advertising

If a store advertises an “everything 50% off” sale, then all its stock must be half price. If a store advertises “up to 50% off” or “10-50% off”, a reasonable number of items must be 50% off – not just one or two.

When advertising a sale, the store should have reasonable stocks available of the reduced items. Advertising goods on sale without having sufficient stock to meet likely demand is called “bait advertising” and, again, if this is the case, you may have been enticed into the store by misleading advertising. You shouldn't arrive one hour after the doors open on the first day of a sale, only to find that the store has only a few items reduced and these have already sold out.

A “sale” means a chance to buy goods at lower prices for a short time. The longer the sale goes on the more likely that a “great price reduction” ends up as the store’s normal selling price for the goods. A store having a permanent or continuous sale will risk breaching the Fair Trading Act by misleading about price savings.

When it comes to stating prices, the store must not mislead you about the true price relative to the sale price. It can't raise its prices before the sale and then quickly lower them again, making you think that you're getting a special when really the goods are the normal price. If a store advertises goods as “was $100 – now $75”, the normal price must be $100.

Been ripped off?

If you believe the Fair Trading Act has been breached after you’ve bought something and you want to sort out the problem your first port of call should be the trader. Go back to them and discuss the problem you have with their sale. You may be able to come to an agreement over how the issue can be resolved.

If you get no joy and want to take the matter further, write a letter to the trader. A letter may have more impact and be more effective than a phone call or visit.

If you’re unable to resolve the matter directly with the trader, you may choose to take a claim to the Disputes Tribunal.

Report it

If you believe the Fair Trading Act has been breached because that summer “bargain” wasn’t what it claimed to be, you can report it to the Commerce Commission. The Commission, which enforces the Act, can’t help you resolve your individual claim against the trader, but it may prosecute the offending business if it considers that a breach of the Act has occurred.

If you decide to report information to the Commission, be ready to provide information about the details of the breach, such as the name of the store, the nature of the breach (for example, misleading advertising) and copies of any evidence (for example, your receipt for the sale item or sale advertising material).

To make a complaint to the Commerce Commission, phone 0800 94 3600.