Consumer NZ said it welcomed an announcement from the Commerce Commission this morning, which warned retailers to toe the line on pricing rules.
In an open letter to retailers, the commission said pricing concerns were the largest source of complaints last year and warned it would prosecute those not following the regulations.
"We receive a significant number of complaints from consumers who have been misled by, or are concerned about, discount sales advertising and price promotions both in-store and online," the letter said.
"We also see a variety of these practices in the market ourselves."
The letter follows the recent prosecution of retailer Bike Barn which was fined $800,000 for misleading discount sales and price promotions that breached the Fair Trading Act.
Late last year Trustpower was fined $390,000 for misleading advertising around pricing and contract terms.
"Consumers look out for sales and we know that sales can drive competition among retailers and value for consumers," Commissioner Anna Rawlings said.
"However, when price claims are not accurate and discounts are exaggerated, consumers do not get the 'bargain' they believed they were getting. It is also unfair to other retailers who are offering genuine special prices and pricing their goods accurately," she said.
"We are observing that some retailers' marketing strategies place significant reliance on the use of price promotions to drive sales. We are concerned that some retailers may be misleading consumers about the savings that they offer."
Rawlings said the commission was hoping to improve trader compliance through education which was why the letter had been published.
Pricing Traps
Exaggerated discounts
Giving consumers the misleading impression they are getting significant discounts when, in fact, the items have never sold, or do not normally sell, at the price which is being compared with the discounted price.
'Was/Now' discounts
Giving consumers the misleading impression that items had been offered at a previous price, and are now being offered at a lower price when in reality, the items have never sold at the price advertised as the previous price.
Continual promotional pricing
Continually selling products at an advertised promotional price giving consumers the misleading impression that this price is less than the price they would usually pay. If a business continually sells a product at a promotional price, then the promotional price becomes the usual selling price.
Fine print
Giving consumers the misleading impression that the advertised price is the total price they need to pay for the good or service when additional unavoidable charges must also be paid and are contained in the fine print.
A sale is in its 'Final days' or items are at 'clearance prices'
Creating a sense of urgency for consumers to act to get the discount, when in fact the items continue to be offered at the same price after the 'final days' or 'clearance sale' finishes.
Limited stock at discount prices
Using ranges which give consumers a misleading impression that a promotion is more attractive than it is. For example claiming goods are on sale "from $9.99" or have "up to $50 off", when only a small proportion of goods are on sale at $9.99 or have $50 off.
