Bike Retail Group and Bikes International, the combined operators of the Bike Barn cycle retailer in New Zealand, have been fined $800,000 in the Auckland District Court for running an advertising campaign that was misleading to consumers.
The two firms pleaded guilty to a shared 18 representative charges brought by the Commerce Commission under the Fair Trading Act regarding marketing and sales conduct between 1 July 2013 and 30 June 2015.
Commissioner Anna Rawlings stated that “Bike Barn used exaggerated discounting strategies that gave the impression to customers that they were purchasing bikes at significant mark-downs from the normal retail price – typically 50% off. It also advertised clearance specials that created an impression that the discounts were available for a limited time only. Neither was true. In fact, the discounted prices were Bike Barn’s usual selling prices. Out of nearly 6000 bike sales we analysed during our investigation, only 30 were sold at the so-called full price.”
Rawlings continues on to say, “Today’s judgment sends a strong message to all retailers that employ discounting strategies. Sales are an important marketing tool and, when genuine, drive competition and value for consumers. But it’s vital that deals offer a real saving and products are not promoted in a way that entices consumers to make a purchase under false pretences.”
Bike Barn has changed its advertising and discount strategy in response to the investigation and have apologised for any confusion caused by their misleading advertisements. The Commissioner has said that the judgment sends a strong message to retailers about discounts.