On 17 June 2014, new provisions of the Fair Trading Act came into force. The following guidance should be read in conjunction with our Changes to the Fair Trading Act page.
Advertising goods and services that cannot be supplied in order to lure people into a shop is known as 'bait advertising' and is a breach of the Act.
Reasonable Timeframe, reasonable quantities
Businesses must supply advertised goods or services at the advertised price for a reasonable or stated period of time and in reasonable or stated quantities.
There is no precise definition of what is meant by a 'reasonable period of time' or 'reasonable quantities'. In practice, it will depend on the market in which the business is operating, the likely demand based on experience, the attractiveness of the offer and the nature and extent of the advertising.
General qualifying statements such as 'while stocks last' could still leave a business open to charges of bait advertising if reasonable quantities of the advertised product are not available. Any limits on an offer should be stated, for example, 'one per customer', 'offer ends 1st March'. If stock is not available and consumers are being invited to place orders for it, then any advertising needs to make this clear.
Example: A company advertised a sale of beds on the radio and in newspapers. The newspaper advertisements noted that, for some lines, stocks were limited, but the radio advertisements did not. Two of the cheaper lines of beds were in fact sold out while the radio advertisements for them continued to run. The company was convicted and fined.
Because of advertising deadlines, some businesses place advertisements for goods before they actually have them on hand. Sometimes, advertisements for goods ordered from overseas are placed in anticipation of their arrival. Businesses should be careful to make sure they have reasonable grounds to believe the goods will be available when the advertisement appears.
Example: A furniture store experienced shipping delays on two containers of desks for a promotion. As a result there was insufficient stock available of the desk models promoted in television and newspaper advertisements. The advertising stated that the desks had just arrived. The company was aware of the delay two weeks prior to the advertising campaign, but failed to amend or stop its advertising. The company was convicted and fined.
There may be times when, through no fault of its own, a business is unable to supply goods or services as advertised. Businesses should have a 'raincheck' system in place to ensure that if this happens, they are able to offer to supply or procure the supply of the goods or services, or the equivalent goods or services, at the advertised price, as soon as possible. The goods or services should be provided within a reasonable time if the raincheck is accepted by the customer.
A proper raincheck system not only ensures that customers' needs are met, but is also a defence against prosecution when goods or services are not available as advertised.
If you have an online presence, it is important that your website is kept up to date so that stock or special offers that are no longer available are not promoted.