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Wheelie low prices deemed misleading

By Matt O'Neale - 13 Feb 2017

If your business uses discounting strategies, take heed. NZ bicycle retailer Bike Barn has been fined $800,000 after pleading guilty to charges of misleading conduct.

Bike Barn promoted its products as being marked-down from regular prices, including in clearance specials. The Commerce Commission contended that these discounts were exaggerated - with only 30 of the near 6,000 bike sales analysed being below Bike Barn's supposed full price.

The Commission noted "Sales are an important marketing tool […] but it's vital that deals offer a real saving and products are not promoted in a way that entices consumers to make a purchase under false pretences".

This decision comes one week after pharmaceutical company Reckitt Benckiser was found guilty of misleading consumers on the effects of its specific pain range products. Its fine: $1.08 million.

The Fair Trading Act prohibits parties in trade from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. Traders should consider their obligations under the Act before committing to any marketing strategy.

If you require assistance with understanding your obligations under the Fair Trading Act, contact Matt O'Neale or Melissa Higham. We're happy to help with any concerns you may have.


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