Retailer warned over voucher promotion

The Commerce Commission is reminding retailers that, when offering free gifts or prizes, they should ensure that the fine print does not materially alter the terms of the offer. This is particularly the case when the information would be critical to a person’s decision to buy the goods or services.

“If the overall impression given by a promotion or advertisement is misleading, it risks breaching the Fair Trading Act no matter what information is provided in fine print,” said Greg Allan, Commerce Commission Fair Trading Manager, Wellington .

The Commission has recently issued a warning to Borders that a pre-Christmas voucher promotion risked breaching the Fair Trading Act.

In November and December 2009 Borders advertised a promotion with the headline offer “Receive $20 in vouchers for every $75 you spend at Borders until Christmas.” The promotion was widely advertised in-store and online through an e-newsletter and on Borders’ website. However, the small print of the offer specified that customers could only redeem one $10 voucher in January and a second $10 voucher February, which, in the Commission’s view, materially changed the headline offer.

“The Commission received complaints from consumers saying that they felt misled as they had spent the required amount believing that they could get a $20 discount for one purchase,” said Mr Allan.

“We are pleased that Borders will honour the vouchers for a $20 discount for one purchase and that they will continue to honour the vouchers beyond the current expiry date of the end of February.”

“It is a common marketing practice for businesses to use these types of voucher promotions. While a warning to Borders is the most appropriate action in this case, it does also serve as a reminder to businesses that they need to ensure that their promotions do not mislead the consumer about the nature of any gift or prize. Misleading representations about gifts and prizes can lead consumers to make purchases that they may not otherwise have made at the store, which is damaging both to consumers and other competing businesses,” said Mr Allan.

The Commission will not be taking any further action against Borders at this stage but will continue to monitor Borders’ promotion