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Misleading advertising 

For many traders, getting customers through their doors is half the battle. Fair Trading takes a close interest in some of the ploys used to attract them.

Bait advertising

Advertisements can be factual, sometimes annoying and occasionally funny. In a busy world, they are all jostling for our attention. But the law demands they share one important characteristic. They must not be misleading or deceptive.

When it comes to deceptive advertising, a scam called ‘bait and switch’ takes the cake. Unscrupulous traders entice customers into their stores by advertising goods at very low prices but only have a handful of the sale items in stock. When the advertised goods quickly sell out, customers are steered towards higher priced stock or lower quality goods.

It's unfair, it’s deceptive – and it’s illegal. Retailers must make sure that reasonable supplies of the product are available during sales. What is ‘reasonable’ will depend upon the type of product, the terms of the sales advertising and the previous sales experience of the trader.

For example, it may be reasonable for an electrical retailer to have half a dozen washing machines on sale but it would be quite unreasonable for a clothing retailer to promote a special sale on, say, six skirts without disclosing that stocks were limited.

The period of the offer should be made clear in the advertisement. If it is only available for a limited period or stocks are limited, then that fact should be stated clearly in the advertisement. Consumers have a right to know exactly where they stand. We don’t have to put up with this type of behaviour.

Case study: bait advertising - read about Annie and how the ads she put in a medical journal never appeared...

Competition in the retail industry is fierce. But traders must ensure honesty and accuracy do not become the casualties in price-cutting wars.

False advertising

Traders often conduct sales to bolster their turn-over and consumers can reap the benefits. However retailers must abide by the rules.

Their special offers should not mislead or deceive their customers. When goods are advertised for sale at a price lower than the usual price, this means the price normally charged for the item. It doesn't mean some inflated figure that gives the impression the savings are greater than they really are. A retailer cannot simply pluck a figure out of thin air, claim it is the normal price and then reduce it. The law will see through such transparent charades.

In 1996 Fair Trading's Commonwealth counterpart, the Australian Competition and Consumer Commission, prosecuted the Cue Group for this activity. That company was subsequently fined $75,000 by the Federal Court on 30 counts of making false and misleading representations about the price of garments offered for sale. The retailer had released a clothing range with price tags showing the original price crossed out and a lower price inserted. The alleged savings ranged from $15 to $56. However the court found the items had never been offered for sale at the higher price.

Most of us tend to take advertising claims with a grain of salt. But when it comes to prices, there is no room for 'hype'. The information provided must be honest and accurate.

Tip - Consumers who shop around and compare prices are less likely to fall for this ploy.