Deal site 1-day fined $840,000 for lying to consumers about product scarcity

Deal site 1-day, along with themarket.com, is owned by The Warehouse.

A Judge has fined deal site 1-day the better part of $1 million for misleading consumers into believing products were running low.

The long-running website, now owned by The Warehouse Group, offers limited time deals on various products, from headphones to dog treats to chilly bins.

Graphics on its website suggested products were running low and users should get in quick, when in fact its stocks remained plentiful.

The Commerce Commission laid eight representative charges under the Fair Trading Act for the conduct covering three and a half years, to which the company, named in court documents as Warehouse e-commerce venture themarket.com, pleaded guilty early on.

The company, represented by Chapman Tripp's Matt Sumpter, appeared for sentence before Judge Peter Winter in the Auckland District Court on Wednesday morning.

Meredith Connell partner Alysha McClintock, acting as prosecutor for the commission, said the "pervasive" misrepresentations on the site were so intrinsic to the company's business model they were embedded in its name.

"This company built its business model around customers' fears of missing out."

McClintock said 1-day sought to shift responsibility back on to the consumer by saying buyers should have researched the deal themselves.

She cited the example of a deal the company was running for the sale of Airpods - a type of wireless headphones.

They had 2000 in stock and sold 100 over the course of the first day.

By 10am the next morning the company was claiming they had only between 10 and 19 per cent of stock left, McClintock said.

"Effectively, it's a pressure selling business model."

Sumpter said the only thing the commission and the company were divided on was its culpability for misleading consumers.

"1-day is remorseful, it understands this is a serious matter."

He said the company was careless in not reviewing the outdated algorithm behind its website.

"It was a case of what worked in 2007 was not fit for purpose in 2019."

Sumpter sought a 35 per cent discount for the company's immediate guilty plea.

Judge Winter adopted a starting point of $1.2 million, applying a discount of 25 per cent for the early guilty plea and a further 5 per cent for its "extensive co-operation" with the commission, resulting in a final fine of $840,000.

A statement from the Warehouse Group following the sentencing said the offending graphics were implemented before it took over ownership of 1-day.

"We take our obligations under the Fair Trading Act seriously and accept the charges relating to legacy features of the 1-day website," a statement said.

"The implementation of these features was prior to our ownership, and these features were corrected in June 2020, after they were raised by the Commerce Commission."