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EVERYONE LOVES A DISCOUNT, BUT ADVERTISER BEWARE The recent Federal Court of Australia decision in the ACCC versus Kogan Australia case is a reminder of potential pitfalls in advertising sales and savings. By Bird & Bird Partner Lynne Lewis and Special Counsel Megan Edwards. evidence the former price and how long it was in place. The types of records that should be kept include advertising, screen shots of web pages, and records of sales. These will be critical if the ACCC comes knocking to seek substantiation for marketing claims. DON’T use an inflated or outdated original price. Don’t compare the sales price with an original price you never offered the product at, or if it was only offered at that original price for a short time or a long time in the past. DON’T represent that a sale is for a short period, and a price reduction is temporary, if the price will be used again or for a longer period. The ACCC and the courts take issue with creating a false sense of urgency for consumers to buy. LEGAL In 2018 Kogan Australia ran a “Tax Time” promotion in which it offered a 10 per cent reduction on the advertised price of more than 78,000 products. To get the reduction, consumers were required to enter a promotional code at checkout. Kogan used the following claims in its advertisements: • “Use code TAXTIME to reduce prices by 10% at checkout”. • “Use code TAXTIME to reduce prices by 10% at checkout”. • “48 hours left!” • “Ends midnight”. • “Use code TAXTIME to reduce almost all Kogan.com prices by 10% at checkout. Shop now \\\\\\\[link\\\\\\\] T&Cs apply.” The evidence showed that the price of 621 of the advertised products during the Tax Time promotion was increased by Kogan just before promotion and decreased after the promotion. As a result, it was argued that consumers did not receive a genuine 10 per cent reduction on some of the products on offer during the promotion. The court found that Kogan engaged in false, misleading or deceptive conduct in contravention of the Australian Consumer Law, falsely representing that: If consumers bought products during the promotion and used the promotion code, they would receive a 10 per cent discount off the price at which the products were available for sale for a reasonable period before the promotion Consumers had a limited opportunity, if they bought products during the promotion and used the promotion code, to receive a 10 per cent discount off the price at which the products would be available for sale for a reasonable period after the promotion. A hearing in relation to penalties was still to occur at the time of writing this article. The findings follow the issue of infringement notices by the ACCC, and court enforceable undertakings it has sought from retailers, in late 2019 and early 2020 in relation to was/now pricing. Dos and don’ts in savings representations Fundamentally, was/now pricing represents to consumers that they will achieve a saving by buying the advertised product during the sale period. To avoid being in contravention of the Australian Consumer Law, this saving representation must not be misleading or deceptive. To reduce the risk of was/now pricing representation being deemed misleading: DO ensure that customers have been able to pay the ‘was’ price for a reasonable period immediately before the sale. The question as to what is a ‘reasonable’ period is not clear, as the court in this case was not required to rule on this. What a ‘reasonable’ period is will vary from case to case and depend on such factors as the type of product, market involved, and historical frequency of price changes. DO make sure you keep records that About Lynne Lewis Lynne is a partner in Bird & Bird’s Intellectual Property Group in Sydney. Intellectual property and related consumer and regulatory law is her area of specialty. She works on all aspects of the creation, commercialisation, management, protection and enforcement of IP rights, as well as on retail and consumer law, dealing with the application of the Australian Consumer Law and the complexities of franchise law. About Megan Edwards Megan is Special Counsel with Bird & Bird. She assists clients to traverse the regulatory environment to market and sell their products in Australia, particularly in the technology, telecommunications, gaming and electronics, consumer products and food and beverage industries. About Bird & Bird Bird & Bird is one of the world’s leading international law firms advising industries where technology, regulation and intellectual property are driving change. With its strong Australian presence, clients enjoy global reach across various practice areas. OCT, 2020 RETAIL WORLD 63