You may have noticed that appliance and furniture store company Harvey Norman has got itself in a bit of a predicament.
The retailer spent days promoting its sale as ‘New Zealand’s biggest retail sale’ through a massive ad campaign, and it certainly lived up to its name.
Items which were worth thousands were mistakenly priced as less than $100 due to a ‘technical glitch’.
The company didn’t pick up on the mistake for eight hours, causing word to spread via social media about the bargains available on its site.
By the time the jig was up, more than 300 people had snatched up the too-good-to-be-true deals.
The company has since issued a statement saying the purchases can’t be honoured.
“All sales made during this period cannot be honoured. Our website terms and conditions state that we may accept or reject any offer to purchase made by you and that we have the right to correct any errors,” it said.
Harvey Norman is offering $100 vouchers as a replacement to those affected, but customers are riled up about the mistake.
One woman told the NZ Herald she thought the prices were genuine due to the massive advertising campaign that had hyped the sale in the days leading up to it.
“It’s unfair and I think it’s rude. People say we just took it for granted but [Harvey Norman] did not have comparative prices. It was advertised as the biggest sale so you would think it’s the biggest sale,” she said.
A reoccurring problem
This kind of situation isn’t uncommon for retailers – it has happened several times overseas.
Tools and hardware retailer Screwfix.com experienced a technical glitch that priced all the goods on its site at £34.99 (NZ$82.68).
This included items like ride-on mowers which are worth thousands of pounds.
Screwfix responded by telling staff not to hand over any orders, though some orders slipped through and had already been delivered or collected before the company could do damage control.
“We have reviewed all transactions and those customers affected are being contacted today and issued a refund. This does not affect any customers that have already received a delivery or collected their goods,” it said.
Likewise, UK supermarket Asda suffered a glitch in its website that let customers repeatedly use a £50 voucher that was meant for one-time use only.
The supermarket quickly cancelled the voucher and wouldn’t honour any outstanding orders.
Another UK store, Next, had a remarkably similar situation to Harvey Norman.
A pair of sofas worth £1198 were listed for just £98 on its site.
Bargain hunters took advantage of the deal and even received conformation emails with estimated delivery dates.
The retailer fell back on its small print, which says it has the right to cancel orders before they’re dispatched for delivery.
In the US, a technical glitch at Wal-Mart led to the company offering items that were hugely underpriced on its website. Highlights included kayaks for US$11 and computer monitors for US$9.
Wal-Mart cancelled orders and offered its miffed consumers a US$10 gift voucher.
Closer to home, supermarket chain Countdown found itself in a sticky situation after hams were advertised for $8.99 shortly before Christmas.
This price was meant to be per kilo, but one customer managed to snaffle five hams at the bargain price.
Countdown spokeswoman Kate Porter told Stuff the supermarket offered customers who thought they’d bought hams for $8.99 free delivery on their next 10 internet shopping trips as a goodwill gesture.
What the law says
The problem with technical glitches on retailers’ websites is the outcome isn’t as clear-cut as in-store pricing errors.
In store, the law is if an item is priced incorrectly on a shelf, retailers aren’t under any obligation to honour it.
However, if a retailer displays or advertises goods at the wrong price, they may be breaking the Fair Trading Act by misleading consumers about the item’s true worth.
Online is a bit more complex.
According to The Telegraph, a legally binding contract is complete when a retailer accepts an order – but even the confirmation email at the point of order may not count as acceptance.
Retailers can reserve the right to cancel an order up to the point of delivery, if it’s in their terms and conditions.
Consumer Affairs says on the matter:
“Can a trader ask for the money back if they sell the goods at the wrong price?
After the sale is completed a trader can’t ask a consumer to pay the extra amount, unless the consumer knew that there was a mistake about the price and the price was considerably less than it should have been. For example if you bought a jumper for $30 when it was supposed to be $40, then the trader can’t ask for the extra money. But if you bought a new TV that was supposed to be $500 and the trader only charged your eftpos card $50 then the trader can ask you to pay the extra amount.”
Harvey Norman is in the grey area, as it could claim that there’s no way items would sell at such a cheap price.
However, as shoppers have said, advertising it as ‘New Zealand’s biggest retail sale’ could lead customers to believe the prices were legitimate.
Barrister Patrick McGrath told the NZ Herald he believed Harvey Norman is on the back foot legally because the sales and purchase had been completed, so customers had a right to keep their products.
The Commerce Commission says a number of complaints about Harvey Norman have been received.
The issue isn’t clear-cut, but it seems like Harvey Norman may be able to refuse to honour the sales.
But its credibility with customers may be tainted in the process.
Harvey Norman is already one of eight traders being monitored by the Commission in its Trader Compliance Programme.
This is because the eight traders made up a quarter of consumer complaints to the commission last year, so the programme is trying to reduce complaints.