Strandbags charged over discounting practices

Thursday, 27 May 2021

The Commerce Commission has filed seven representative charges against retailer Strandbags over its discounting and sales practices.

The charges were under section 10 of the Fair Trading Act.

Strandbags is an Australasian retailer of handbags, wallets, luggage, backpacks and business bags.

It has 28 shops in New Zealand as well as a website.

The Commerce Commission has filed seven representative charges against handbag retailer Strandbags for advertised discounts that it said were likely to mislead customers.

* Bike Barn receives big fine for 'calculated' false advertising

* Shop sales deep discounts hard to decipher

* Consumer watchdog probing misleading retail claims

The commission alleges that between July 2018 and January last year Strandbags’ representations about significantly discounted or special prices were liable to mislead the public.

During that period, the commission alleges that Strandbags routinely advertised products “on sale” using comparative pricing, for example saying an item was $289 but was now $144.50, claiming a percentage discount or claiming that a shopper would save a certain amount on an item.

The commission alleges Strandbags’ sales and promotional conduct created the impression that prices being offered were significantly discounted or special prices when products were in fact being sold at their usual price or nearer to their usual price than consumers were led to believe.

The advertised discounts were liable to mislead in a variety of ways, the commission said.

Some products had not been previously sold at the higher price from which a discount was said to be made, while others were on sale for so long that the prices could no longer be said to be special.

The Commerce Commission alleges bag retailer Strandbags was misleading the public over discounts between July 2018 and January 2020.

The commission also alleged the prices of certain products were artificially inflated prior to promotion in order to make a more significant discounted pricing claim.

Price comparisons could give consumers helpful information and promote competition among retailers, the commission said.

But businesses must take care not to mislead consumers.

Any representations made about price, including special or discounted prices, must be clear, accurate and unambiguous.

Savings must be genuine by comparison with the usual selling price of the product.

Customers must not be made to think they were getting a better deal than they were.

In May 2017 the commission issued an open letter to retailers about misleading pricing, including a tip sheet for promotions.

Strandbags is not the first retailer to be charged for misleading customers about discounts.

In 2017, Bike Barn was fined $800,000 for misleading pricing, online mobile phone store Buy Mobile was warned over its price discount claims in 2018 and Pak ‘n Save Mangere was fined $78,000 for pricing discrepancies.

The commission was unable to comment further on the Strandbags case as it was now before the courts.