Bike Barn receives big fine for 'calculated' false advertising

Friday, 10 February 2017

Bike Barn has been hit with a $800,000 fine for misrepresenting sale prices, one of the largest ever fines under the Fair Trading Act fines

Bike Barn had marketed bikes at 'clearance' and 'half price' when they were sold at their normal price.

Bike Barn received was fined $800,000 for its misleading advertising.

Last year, the Commerce Commission filed 16 charges in the Auckland District Court against Bikes International and Bike Retail Group, which operate as Bike Barn.

The charges relate to alleged misrepresentations which were made during 25 marketing campaigns by Bike Barn between July 2013 and June 2015.

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Bike Barn, which has 15 company-owned shops around the country, said at the time it would plead guilty to the charges and had co-operated with the commission's investigation.

Commissioner Anna Rawlings said Bike Barn had attracted customers with misleading claims about discounts.

They used exaggerated strategies which suggested bikes were priced significantly below their normal retail price, normally 50 per cent less, and also advertised clearance specials which suggested they were for a limited time only.

'Neither was true,' Rawling said.

'In fact, the discounted prices were Bike Barn's usual selling prices.

'Out of nearly 6000 bike sales we analysed during our investigation, only 30 were sold at the so-called full price,' Rawling said.

Bike Barn has since changed its advertising and discount strategy.

Rawlings said the judgment sent a strong message to retailers about discounts.

'Sales are an important marketing tool and, when genuine, drive competition and value for consumers.

'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,' she said.

Bike Barn said it apologised for any confusion caused by its advertising.

It said a bike was a significant purchase and it encouraged customers to compare prices before buying.