Misleading pricing in advertisements

A customer went to purchase a coffee table from a furniture store and was unhappy when the store advised that the item was not in stock, and that they would have to pay an additional fee to collect the table from store’s freight depot.

The fine print of the pricing label stated “plus shipping costs” but the customer did not expect this charge would apply to items being collected rather than delivered.

What is the legal position in New Zealand?

Under the Fair Trading Act 1986 consumers have the right to clear, precise, and factual pricing for products and services.

Misleading pricing occurs when a product is promoted in a way that might mislead consumers about its true cost. Any representations about price must be clear, accurate, and unambiguous.

Consumers should be confident that an advertised price reflects the true cost. Fine print should not be used to conceal important information which would be critical to a person’s decision to buy goods or services.

If the overall impression given by an advertisement is misleading it will breach the Act, no matter what information is provided in fine print. Displaying prices lower than the actual selling price is misleading and likely violates the Act.

In this example it is problematic that the charges are stated as shipping costs, even though the customer was required to collect the item. The test considers whether a "reasonably attentive reader" would anticipate the additional expenses.

How to stay within the law as a business

To comply with the law as a business it is essential not to mislead consumers when marketing goods and services.

Price claims should be clear, accurate, and unambiguous, avoiding misleading discounts or understated prices. The fine print should be minimal and not confuse consumers. Violating the Act can result in fines, bans, or other serious consequences for businesses.

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