New Zealand Law Society - Online store warned for using price discounts it couldn’t back up

Online store warned for using price discounts it couldn’t back up

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Amaysim Operations Pty Ltd, trading as Buy Mobile, has been warned by the Commerce Commission for the “unsubstantiated claims” it made about discounts on the price of some mobile phones.

The Commission believes Buy Mobile is likely to have breached the Fair Trading Act because it could not provide the grounds or information it relied on when advertising specific dollar savings for some of its advertised mobile phones. By law, businesses must have reasonable grounds for making a claim at the time it is made.

For example, Buy Mobile advertised a $930 discount on a Samsung Galaxy S5 selling for $340 on Buy Mobile’s website. Buy Mobile said its staff relied on publicly available information about competitor’s prices to make discount claims, but it could not provide the Commission with this information when asked to do so.

Buy Mobile has stopped making comparative pricing claims on its website. 

Commissioner Anna Rawlings says price comparisons can give consumers useful information and can promote competition between retailers.

“At the time a claim is made traders should be able to explain the basis for it and show where they got the information from. When selling products like mobile phones where prices can change quite quickly, traders should have a system in place to ensure that any advertised discounts remain accurate and comparisons with other retailers are current.

“It is unfair to consumers who rely on pricing claims and to other businesses offering genuine savings, if price savings are exaggerated, or comparative information is not from a credible and current source,” she says.

A warning is not a finding of non-compliance; only the Courts can decide whether a breach of the law has occurred.