Spot Check: Are your price reduction ads putting you at risk?
NEW mobile phone!! WAS $399 NOW $199!!
BRAND NEW phone!! $199 – SAVE over 50%!!
Ads that show ‘two price’ or ‘was / now’ pricing are common, effective and legal … provided they’re not misleading. There are special rules about how to get ‘was / now” pricing ads right. While care needs to be taken, getting it right is relatively easy.
Getting it wrong can be costly, as the former owners of the Zamel’s jewellery chain have found – the ACCC took them to court over allegedly misleading ‘was / now’ price ads in one of their catalogues. In January 2009, the court handed down a fine of $380,000.
National consumer law Bill hits Parliament
On 24 June 2009, the Government introduced the Australian Consumer Law Bill into Parliament. It represents the biggest shake up of Australian consumer law in a long time.
From 1 January 2010, the Government intends that we’ll have a national unfair contract terms law. ACCC will have power to demand that advertisers positively substantiate any claims they make. And there’ll be new penalties, enforcement powers and options for compensating consumers.
Stay tuned to CSP Central for plenty of news and expert commentary about the new law. We already have some detailed comments on one misconceived part of the drafting.
Links
TPG gets new law a bit right !
Let’s give credit to TPG. The compliance-challenged comms co doesn’t often set a standard, but after recently breaching the new component pricing law, it has taken a reasonable shot at complying with today’s web site advert.
Sure, its math doesn’t make sense. $20 SIM plus $20 deposit does not equal $52.99. But we know what they mean … it’s the $20 SIM plus the $20 deposit plus the $12.99 for a non-contracted month that adds up to $52.99.
And the total price isn’t super-prominent, but it’s not in micro-print, and it is in a clear area of its own, and it is immediately below the headline pricing, and it’s not a big or cluttered ad, and it is in capitals. ACCC might debate whether it passes the ‘prominence’ test but by TPG’s standards, it’s a good effort.
And you know two crazy things ?
Optus monsters component pricing law
Just days after ACCC wrote to the industry demanding immediate compliance with its new component pricing law, mega-telco Optus has ignored it.
Today’s web carries a flash ad spruiking a ‘new monster value ‘yes’ $59 cap, ‘so good, it’s scary’. So is the fact that it’s an illegal advertisement.
Well, $59 is the monthly base price for the plan, so unless it’s a month-to-month plan (so that $59 would be the total cost as well as the monthly cost), the advert needs to state prominently the total contract cost.
Well, the flash banner doesn’t, and neither does the web page it links to. The web page includes total cost down the bottom and in small print. But ‘prominent’ ? No way. Optus is plainly in breach of section 53C of the Trade Practices Act.
ACCC advice doesn’t add up
Just to show that CSPs aren’t the only ones we are watching …
ACCC’s new guide to the component pricing law shows how easy it is to slip up in advertising.
Click on the sample advert to enlarge it, and you’ll find that – despite ACCC encouragement – the advertiser shouldn’t advertise a total price of $2,240. We’re all human, even the regulator.
ACCC needs a communications guru
Funny how we all have blind spots. When it assesses industry advertising, ACCC is keenly aware that a simple, clear message impacts on ordinary people, and that complicated T&Cs and small print aren’t taken on board.
But when it communicates with those same ordinary people, ACCC can forget all about the power of the main message and descend into baffling lawyer-speak.
ACCC should engage a marketing expert to offer input into its recall notices and consumer notifications. If it wants to communicate important messages, it should use the skills of a communicator.
We’ll look at a couple of examples and analyse what goes wrong.
New consumer law will punch holes in ISP / telco contracts
Last August, we explained that the Ministerial Council on Consumer Affairs had generally accepted a Federal Productivity Commission recommendation for a national ‘unfair contracts’ law.
Canberra now says it will fast track the new law. Expect a bill in Parliament by June 2009, and a new law in force from 1 January 2010. As part of the process, an important discussion paper is now available.
Make no mistake. The new law will force a re-think of most ISP and telco standard contracts in Australia. Many everyday, standard terms will be at risk, or even completely banned.
It will also require Consumer Affairs Victoria to review its approach to unfair contracts.
Test yourself: How far back can a telco or ISP back bill ?
How far back can a CSP go in billing charges after the billing period in which they were incurred ?
Clue … there’s a Communications Alliance Code that’s relevant, and a TIO policy.
Advertising substantiation notices: Coming to a national regulator near you
When the ACCC suspects a CSP is breaching the Trade Practices Act with unacceptable advertising, one of its main weapons is to issue a ‘section 155 notice‘.
It’s a bit like a subpoena and even a search warrant and requires the CSP to provide detailed documents, records and other information that may show it is in breach.
Now the Federal Government has agreed to give the regulator an even more effective power that will change the way CSPs need to approach advertising.
Mythbuster: A CSP can’t change its contract instantly
