Strandbags fined $780k for misleading discounting practices

Friday, 11 November 2022

Strandbags has been taken to court by the Commerce Commission.

Bag retailer Strandbags have been fined $780,000 for misleading customers into thinking they were getting a good deal.

The bag retailer was sentenced on seven charges at the Auckland District Court on Friday over its discounting and sales practices between July 2018 and January last year, under section 10 of the Fair Trading Act.

The Commerce Commission filed the charges and alleged during that time Strandbags’ representations about significantly discounted or special prices were liable to mislead the public.

Commerce Commission chair Anna Rawlings said Strandbags used numerous pricing strategies that created misleading impressions about the discounts available, or the 'special” nature of the price.

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'Strandbags routinely advertised its products as if they were significantly discounted or being sold at special prices, which was not true,” Rawlings said.

'Our investigation found that some products had never been 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.

'We found prices of certain products were artificially increased prior to the sale, in order to make the discount seem more significant. Other products had been repeatedly discounted, but only ever referring to the very original ticket price as a comparison, despite being sold at different, lower, prices since.”

Strandbags’ discounting practices were liable to mislead consumers into thinking a greater saving was on offer than was really the case, which the commission said created a false sense of urgency.

In the Auckland District Court on Friday, the judge concluded that price inflation and immediate discounting was deliberate, and that extended and repeated discounting was “significantly” or “highly” careless, bordering on reckless.

She also agreed with the commission that breaching the Fair Trading Act was integral to Strandbags' profitability.

Rawlings said it was a reminder to businesses to ensure that the bargains being offered to consumers were genuine, unambiguous and not promoted in a way that enticed consumers to make a purchase believing it offered a better discount than it really did.

“Consumers deserve to get the deal that they think they are getting. With Black Friday and Christmas around the corner we are urging businesses to review their processes and the deals on offer.

“When making a promotional claim, think about the overall impression that consumers might take away from it, and whether this differs from what you’re actually offering.”

The Australasian retailer sells handbags, wallets, luggage, backpacks and business bags online and has 26 stores throughout New Zealand.

Rawlings said customers should shop around to ensure they were really getting a good deal. 'Just because one store is offering a discount, does not mean you won’t get a better price elsewhere. Get an idea of the price you could usually expect to pay for something and then satisfy yourself that the saving you are offered is genuine.”