Background
In January 2023, Mega Department Stores Ltd (MDS) planned a large promotional campaign and, before launching it, requested advice on whether any aspects of the campaign might breach the Australian Consumer Law (ACL) and how potential issues could be avoided. The Australian Consumer Law (ACL) was created to protect consumers from companies that make inflated or misleading price claims about their products or services. The paper discusses five scenarios in which the company may violate the ACL and provides guidance on how to avoid them. Each plan will be examined to determine how businesses can comply with consumer protection laws, such as providing accurate information about prices and terms and avoiding false or misleading representations.
Advertising a Discontinued Line of Television Sets
Scenario
MDS plans to advertise discontinued televisions at “Now only $250 each,” even though they were previously sold for $1,000.
Analysis
Due to the ACL’s prohibition on companies making false or deceptive claims about the cost of goods or services, MDS’s plan to attract customers by advertising a line of televisions at a reduced price may be in violation. MDS could provide customers with an accurate and precise description of the product, its discounted price, and any applicable limitations or restrictions to avoid violating the ACL. MDS, for example, could clearly state that the discounted price applies only to a limited number of television sets or that the television sets are older models. As a result, consumers can decide for themselves whether to buy the discounted item.
“Two for One” Sale of Toasters
Scenario
MDS proposes a “Two for One” toaster promotion for $99, with each toaster previously priced at $80.
Analysis
The ACL forbids businesses from making false or misleading claims about the price of goods or services. Therefore, the department store’s “two for one” marketing may be illegal if the advertised price is deceptive or misleading. MDS should provide customers with a transparent description of the offer, the applicable price, and any restrictions or limitations that may apply to avoid violating the ACL. MDS could clearly state that the discounted price applies only when customers purchase two toasters and does not include taxes or delivery charges. Customers will be equipped with the knowledge they need to decide whether to take advantage of the special discount offer.
Opening an Online Store
Scenario
MDS intends to launch an online store that promotes products, accepts orders and credit card payments, and delivers items in stock.
Analysis
If MDS’s proposed online store fails to comply with consumer protections, it may violate the ACL. This is due to the ACL’s prohibition on businesses engaging in unfair trading practices, such as failing to provide customers with the information they require to make an informed purchase decision. MDS should ensure that its online store provides customers with accurate and transparent information about the goods or services offered, the applicable price, any limitations or restrictions that may apply, and the customer’s rights to a refund or exchange if the goods are not as advertised. This is to avoid violating the ACL.
Marketing New High-End and Corporate Products
Scenario
MDS plans to market its premium “Outback” dining tables to consumers at “$15,000 + 10% GST,” while advertising “Power” executive desks to corporate clients at “$10,000 + taxes and delivery fees.”
Analysis
The ACL may be violated if MDS’s plan to market its new high-end and corporate products includes advertised prices that are false or deceptive. Businesses are prohibited from misrepresenting the cost of products or services in any way. To avoid violating the ACL, MDS should provide customers with a detailed description of the products offered, the applicable price, and any applicable taxes or delivery charges. This will enable customers to make a well-informed decision regarding buying the products.
Offering Customers a Discount for Referrals
Scenario
MDS proposes offering a 10% discount to customers who provide contact details of three friends for the “Exclusive Discount Club,” with an additional 5% discount if any of those friends join.
Analysis
Offering customers a referral discount may violate the ACL if the program is unfair or misleading. The ACL forbids businesses from engaging in unfair trading practices, such as making untrue or deceptive statements about the referral program’s benefits or rewards. To avoid violating the ACL, MDS should ensure its referral program is clear and transparent, and that customers receive accurate, up-to-date information about its terms and conditions. Customers will be given the information they need to make an informed decision about whether or not to participate in the program.