Harvey Norman offers voucher and apology over sale and email bungle

Friday, 2 October 2015

Harvey Norman customers who angry after being told furniture they bought in an online sale was wrongly priced have been offered a gift voucher and an apology by the retailer.

A Wellington lawyer has advised customers caught up in a Harvey Norman sale glitch to fight for their goods and 'stuff' the $100 voucher.

Red-faced Harvey Norman has offered a $100 voucher and an apology to customers who were left fuming after the botched sale.

Hundreds of Harvey Norman customers were irate after being told furniture they bought online in its 'biggest ever retail sale' on Thursday morning had been priced incorrectly.

The furniture in the sale included three-piece lounge suites wrongly advertised at $103, two piece suites for $95 and a wooden tables and chairs for $159.

Wellington lawyer Don McIlroy was not impressed the 327 customers had been offered a voucher and urged customers not to settle for it.

'Stuff that. I would not even consider a voucher. The best advice I can give [customers] is to stick with the price and demand [Harvey Norman] produce the goods for the price advertised.'

If Harvey Norman did not honour the furniture sales, it ran the risk of breaching the Fair Trading Act, he said.

He believes customers had been given incorrect advice.

Under section 13 (g) of the Fair Trading Act 1986, Harvey Norman were making a false or misleading representation with respect to the price of any goods or services, McIlroy said.

'If the retailer makes a mistake they have to stick with it.'

To amend the price was misleading and a false representation of price, he said.

Harvey Norman had taken a contractual approach, informing customers it had made a mistake they believed customers had taken advantage of, he said.

'But that is incorrect … The fact they say it was an 'error', is irrelevant,' he said.

The Fair Trade Act trumped contract law, he said.

On Thursday, two other Wellington lawyers said the customers would have to try to prove they believed the advertised price was genuine.

Michael Wigley, principal of Wigley Law, said where there was a genuine mistake by Harvey Norman and the buyer figured the price was too good to be true, it was unlikely they could legally force sale at the low price.

Alan Knowsley, a managing partner with Rainey Collins Lawyers in Wellington, said it appeared a contract had been formed and the onus is on the shop to seek relief from the contract.

The shop could seek relief under the Contractual Mistakes Act if the price was a mistake and it can show the buyer knew of the mistake.

A buyer could seek to enforce the contract if the shop refuses to complete the transaction and the shop would then seek relief, he said.

The offer of a voucher did placate all affected customers.

One of them, Chenelle Fraser-Wood, said: 'Lots of people want to take it further and have already laid complaints with the Commerce Commission.'

Kirstin Belton got the emails but was angry Harvey Norman had not called her back after telling her someone would phone her back.

Another customer was contacted by the retailer to say it would be in touch about a refund and a complimentary $100 voucher, which would be sent to the address supplied. She had still not been refunded.

TRADER COMPLIANCE

Harvey Norman is one of eight traders being monitored by regulators concerned by a high level of complaints.

The Commerce Commission has included Harvey Norman in its Trader Compliance Programme, under which it monitors eight companies that together generated a quarter of consumer complaints to the commission last year.

The programme is in place to try to reduce complaints.

The traders are identified in the commission's 2015 Consumer Issues report, which separately outed Spark as the most-complained-about company last year.

A commission spokesman said it had started receiving more complaints about Harvey Norman since Thursday's sale error.

Complaints about major retailers such as Harvey Norman mostly related to pricing, warranties or credit terms, he said.

Consumer NZ chief executive Sue Chetwin said the lobby group, which had still heard nothing from Harvey Norman, kept track of the commission's list and took it seriously.

Traders in the compliance programme were monitored and educated on consumer and fair trade laws, she said.

The nature of complaints extended to warranties and failing to meet the terms of consumer guarantees.

The sale error was compounded after the retailer sent out a group email to those affected, revealing their email addresses to one another.

After realising the sale botch up, Harvey Norman sent a generic 'error' email to all of the customers who purchased items in the sale, leaving some 'fuming' their personal details had been shared.

The retailer has since emailed the 'customer' an apology for the privacy breach that happened after a 'manual processing error' and urged those concerned to contact the privacy officer at Harvey Norman.

'No other information about you has been disclosed to other customers, this is limited only to your email address. We have taken immediate internal measures to rectify this issue. We ask that you delete our original email that has been sent in error in order to assist to maintain the privacy of all customers who have been affected by this error,' an email sent by the company to customers said.

A Harvey Norman communication spokesman agreed the retailer was working with consumers but said it would not be making any comment.

DAMAGING TO RETAIL

Meanwhile a global retail group is claiming the Harvey Norman price glitch will be damaging for the wider retail sector, which already lags behind the rest of the world.

First Retail Group managing director Chris Wilkinson said the issue was not helpful for the online retail sector as assurance and trust were key factors in encouraging consumers to shop online.

The retail consultants did work in New Zealand, Australia, United Kingdom, North America and Pacific Islands and were seeing a reluctance for kiwis to shop online.

Instead, shoppers used retailer websites to browse what was on offer in a store, he said.

'Here in New Zealand, the ratio of online sales to in-store sales is still low in comparison with places like the UK and United States,' he said.

He believed the blunder would discourage consumers from online shopping, and more robust systems were need to avoid a repeat.

'These issues have happened overseas a while back, however retailers learnt their lessons very early on and have implemented very robust strategies leveraging what's known as master data systems to ensure such major price discrepancies are validated before publishing. It looks like Harvey Norman are not using this type of system, which would have avoided any chance of this occurring.'

The glitch was also a reminder for businesses to have a recovery strategy in place and it was 'unacceptable' to bulk mail customers, he said.

'To bulk email customers is wholly unacceptable from a organisation of any size - let alone a public company like Harvey Norman.'

All online businesses need to have 'plan b' that could effectively communicate securely with customers, while maintaining goodwill in any event where they can't fulfil an offer or transaction, he said.

Retail NZ public affairs general manager Greg Harford said although New Zealanders spent less online than other countries, online shopping was increasing and expected it to continue to grow.

The Harvey Norman incident would not put people off shopping online, he said.

'By and large consumers have confidence in New Zealand retailers and they will realise this was an isolated incident.'