Commission releases video guidance on discount claims

The Commerce Commission has released video guidance for retailers on how to avoid making misleading discount claims.

The video follows up on the open letter on misleading pricing released in May, which highlighted pricing practices which might breach the law, and offered guidance on avoiding them.

“We were very pleased with the response to the open letter on pricing, and we think this new video will help retailers and complement our other guidance in this area,” said Commissioner Anna Rawlings.

A price promotion tip sheet published with the open letter offers nine tips to retailers. The video focuses on one of them: comparing a discounted price with the ‘usual selling price’, also known as the everyday, regular, was, or normal price. Both the video and the tip sheet summarise more detailed guidance which is available in the Commission’s Pricing Fact Sheet.

“This can be a complex area because retailers offer goods at a variety of prices over time, but we think there are some clear principles that retailers should observe” said Ms Rawlings “When it comes to comparing discounted and non-sale prices, a discounted price should be compared with the price at which a good or service is usually sold, or the price at which the good or service was offered before it was marked down”.

The video urges retailers not to exaggerate discounts or “bump up the price” before a sale, creating the impression that items ‘usually’ cost more than they did.

“We know that retailers want clear answers about how to ensure their discount claims can be lawfully made. The fact is there’s no one-size-fits-all answer to explain fair discount pricing, because it depends on things like what the goods are and how often the price changes. However, we think this video will help retailers get it right. As we say in the video those claims must be clear, accurate and unambiguous,” said Ms Rawlings.

The video tackles tactics like retailers claiming as the ‘usual’ price a price that was seldom charged, such as a bicycle retailer which claimed bikes were “half price” when they were almost never sold at full price. It also cites a supermarket chain which claimed 20% or 25% off beer, when it was several months since the beer had been sold at the price from which that discount was claimed.

“Retailers will find guidance in the video on various discounting terms and techniques that are popularly used, and how to grab the customers’ attention while staying within the law,” said Ms Rawlings.

The video is presented by Gordon Harcourt, formerly presenter and reporter on TVNZ’s consumer programme Fair Go, and now a member of the Commission’s communications team.

It has been published on the Commission’s YouTube channel.