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16oct misleading behaviour hero
5 October 2016

Opinion: Misleading behaviour

So-called specials aren’t always that special.

Two prominent New Zealand corporates have been in court this month facing charges for misleading pricing.

Trustpower copped a $390,000 fine after pleading guilty to misleading consumers about the cost of an electricity and broadband deal. Ads for the deal, which ran between March and July 2015, enticed customers with a $49 monthly price for an unlimited data broadband plan.

Turned out, the $49 price was available only to customers who signed up for power and broadband at the same address on a 24-month term. For the second year, the cost of broadband rose to $79. Any customer who wanted out before the 24 months was up faced a $195 exit fee.

Vodafone, in its fourth trip to court for Fair Trading Act breaches since 2011, has been pinged with a $165,000 fine after failing to fully pass on a $10 price drop to about 15,000 mobile customers. Overpayments added up to $92,000, although the Commerce Commission says most customers were overcharged less than $1.

Both cases are telling examples of the “difficulty” traders still appear to have in getting to grips with their basic obligations under the Fair Trading Act, despite it being in place for 30 years.

More cases are set to come. The commission has laid 16 charges against Bike Barn in relation to ad campaigns that allegedly misled consumers about savings available. The campaigns included ads for bikes marked as “half price” when they were usually sold at that price. Bike Barn is expected to plead guilty to the charges.

Retailers frequently try to lure customers with the promise of a bargain. But we’ve found so-called specials aren’t always that special. Products can be discounted so often, you’ve got to ask whether the savings are more than marketing hype.

It’s a problem shoppers face as they wade through supermarket aisles stocked with special offers and discount deals. In our latest supermarket survey, we tracked prices for a basket of 30 items over a seven-week period. More than half the items were regularly discounted.

The supermarkets point to their regular specials as a sign shoppers are getting good deals. But the growing advertising noise in supermarket aisles isn’t convincing everyone.

Pricing practices have won the two supermarket giants a place on the commission’s hit list of the most complained about traders. While the commission isn’t currently investigating any complaints, both chains are on its trader compliance programme. Whether that means consumers will be better off remains to be seen.

About the author:

Jessica joined Consumer in 2008 as a writer. In her current role, she works with a dedicated group of staff responsible for the organisation’s research, advocacy and campaigns. Her research brief covers consumer protection and legal rights as well as investigation of misleading claims, dodgy pricing practices and environmental issues. It’s never a quiet day in the office.

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