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Holding sales for your products can be an effective way to draw in customers and sell a larger volume of goods in a shorter period. You can draw customers in with good marketing of a sale or price promotion, and they may come back again if they like your products. However, you must be careful not to mislead your customers about the actual value of a sale or discount. Otherwise, you run the risk of breaching New Zealand advertising regulations. Therefore, you need to carefully plan the exact discounts you are going to offer and what you will say about any sales or promotions. This article will provide four tips to help you plan a sale or price promotion at your business.

Do Not Hide Important Information in the Fine Print

When creating advertising or promotion materials for an upcoming sale, ensure that the number or price you are promoting is the actual price at which you are selling the product. You cannot hide any extra fees or conditions in the fine print. Your price promotions must be accurate and clear. Otherwise, you run the risk of misleading your customers. Even if you provide a disclaimer, if your advertisement’s overall image is misleading, you are breaking the law.

For example, say you advertise a discounted price of $29.99 for backpacks you are selling. However, this price does not include GST. Instead, you write, “extra charges may apply” in the fine print of your advertisement. The overall advertisement is misleading because that is not the actual price that a customer would expect to pay.

Watch Out for Price Mistakes

A once-off price mistake in a sales promotion is unlikely to be too devastating, as long as you fix it as soon as possible and deal with any subsequent complaints. However, if there are repeated pricing errors, then you run the risk of misleading your customers about what price they pay. Customers expect to pay the price advertised on the shelf. Even if it was a mistake, you might still face legal action if the error was significant enough.

Be sure to avoid pricing mistakes when offering store-wide sales or other similarly large promotions. For example, say you are offering your “biggest sale ever” on all of your online stock. However, through a technological glitch, the prices listed on your stock are significantly lower than you intended. Customers may mistakenly assume these prices are correct because of the way you advertised the sale. 

Make Sure Your Discounts Are Real 

When you offer discounts on your products, you need to ensure that you sell them at a lower price than the price at which you usually sell the product. For example, say that you usually sell your handmade jewellery at $40 apiece. However, you decide to have a sale offering these pieces at a 20% discount. $40 is the usual or everyday price, while $32 is the discounted price. 

You cannot mislead your customers about the usual price of your goods. In a sale, the usual price is not valid if:

  • it is out of date;
  • you have not changed the price for the sale;
  • you have inflated the usual price;
  • you made it up for the sale; or
  • it is one of the many prices you may charge for a specific product.

For example, say that you are having a sale where everything is half price. However, this so-called ‘half price’ is actually the price you usually charge, but you claim you have a higher usual price for the purposes of the sale. This is misleading and unlawful. A discounted price may become the usual price if you continually sell your goods at that lower price. If you mislead your customers about the true nature of a discount, you could face legal action.

Keep Competitor Comparisons Accurate

In advertising for your sales promotion, you may claim that a competitor charges higher prices than you for a certain product. You need to ensure that this comparison is about the same product and not just a similar one. You must be able to provide evidence of any comparisons or claims you make as well.

For example, say that you claim your competitor sells their artisan scarves for $60, whereas you sell them for $40. You may draw customers to your product because the price is lower. However, your competitor makes scarves out of higher quality material, so they charge a higher price. Because your products are not the same, you run the risk of misleading your customers.

Key Takeaways

Sales promotions can be an excellent way to draw in new customers and keep returning customers engaged with your products. However, if you mislead or deceive your customers, you could face heavy legal penalties. If you would like more information or help with legally planning a sale or price promotion, contact LegalVision’s NZ regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

Should I use fine print in my sales ads?

You cannot use fine print to hide important information in your sales advertisements. For example, you should not advertise a price and say that “extra charges apply” in the fine print if the price you advertise is not the total price a customer would pay during the sale.

What is the ‘usual price’?

The ‘usual price’ is the price at which you would typically sell a product. There has to be some consistency to it, and you cannot inflate the usual price to make a discount seem better.

Do I have to honour a pricing mistake?

Generally, you do not have to honour one-off pricing mistakes. However, if there is a pricing error on many of your products at once or mistakes happen continuously, then you may have to honour the pricing mistake.

Are there rules around what prices I can set?

You have the legal right to set the prices for your products. However, there are rules around how you advertise those prices and promote sales for those items. This may vary by industry – for example, there are stricter regulations for pricing in alcohol advertising.

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