As the Festive Season brings increased trade, of the most important things to have in place are robust and compliant Terms and Conditions for your business that should set out clear guidance about how your business will deal with the expected wave of exchanges, returns and refunds of Christmas gifts.
The Australian Consumer Law (‘ACL’) sets out clear rules about these and other issues, including how you should advertise and promote your Festive Season bargains. Here are some things to keep in mind when putting up the ‘sale’ sign:
Was / Now Pricing
A common strategy adopted by businesses across the Festive Season is to advertise discounts on their own previous pricing. To ensure compliance with the ACL, businesses need to:
- make sure products advertised at the ‘was’ price were actually sold at that price for a reasonable period of time before the promotion begins;
- be able to show that consumers would have bought the product at the ‘was’ price. If a business offered a product for the ‘was’ price but rarely or never sold it at that price, it is risky to then embark on a ‘was’/’now’ promotion because the ACCC may consider it to be misleading; and
- implement a discount pricing policy that establishes a clear methodology for how discounts are advertised. It is unlikely that it would be compliant with the ACL for a business to advertise ‘up to 60% off’ a product when only two of the 300 products in that category actually have the 60% discount applied.
Bait advertising is where products or services are offered for sale at reduced prices in order to attract consumers to a business.
While this is a legitimate form of advertising, advertising goods where they are not available in reasonable quantities and for a reasonable period at that discounted price is prohibited. To avoid non-compliance, where a product is in short supply or only on sale for a limited time, you should take care to clearly state this as part of the advertisement.
Promotions and Competitions
Promotions and competitions are a highly effective way of promoting the brand of your business while also encouraging consumer interest and sales across the Festive Season.
If you are considering using a competition or promotion as part of your marketing strategy you should ensure that:
- you intend to actually provide the successful or winning consumer with the advertised prize or reward. The prize or reward must be provided within the time specified by the promotion or, if no time was specified, within a reasonable time; and
- you clearly identify all key conditions of that specific competition in all advertisements relating to it.
The Unsuccessful Gift
The post-Christmas rush to exchange gifts is as inevitable as hearing a Bublé Christmas carol, as people love receiving presents they can’t wait to exchange.
Take care in the representations you make about returns and exchanges in your Terms and Conditions or as displayed on in-store signage as these representations must comply with the ACL. For example, limiting consumers rights by prohibiting refunds generally is unlawful because it implies that consumers cannot get a refund under any circumstance. However, implementing a no refund policy for a ‘change of mind’ is acceptable.
But wait, there’s myrrh!
As the supplier of goods and services you must deal with consumer complaints about defects and you cannot simply redirect a consumer to a manufacturer to deal with the complaint. You are legally obliged to deal with the good, the bad and the ugly..
Where a product has a major fault, the consumer can elect to have the goods replaced, repaired or choose to be refunded the price of the goods in certain circumstances.
Contact us if you need advice on how to ensure your Terms and Conditions are compliant with the ACL. Complying with these rules will ensure you sleigh your sales this Festive Season.