Customers led to believe they were getting a good deal.
Bike Barns’ operators have been fined $800,000 for misleading pricing tactics that led customers to believe they were getting a bargain.
Bike Retail Group Limited and Bikes International Limited pleaded guilty to 18 charges brought by the Commerce Commission under the Fair Trading Act.
Commissioner Anna Rawlings said Bike Barn tried to attract customers by using misleading information about “discounts” and how long they would last. The conduct occurred between July 2013 and June 2015.
“Bike Barn used exaggerated discounting strategies that gave the impression to customers that they were purchasing bikes at significant markdowns from the normal retail price — typically 50% off. It also advertised clearance specials that created an impression that the discounts were available for a limited time only,” Ms Rawlings said.
“Neither was true. 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.”
In sentencing, the judge said Bike Barn’s conduct was “pervasive” and “calculated”.
“Consumers were disadvantaged by false statements, competitors may have been disadvantaged, but the real impact of these offences was that the public were entitled to be protected against things that give impressions that are not correct.”
The commission said Bike Barn has since changed its advertising and discount strategy.
Bike Barn’s sentencing puts other retailers on notice that “special” offers must be genuine. Our research has found there are good grounds to be sceptical about specials. If a product is regularly discounted, a special price isn’t all that special.