This week, retailers across Australia took to the web to slash prices and entice hungry punters under the Click Frenzy sales umbrella. The event sees retailers offering up discounts of up to 90% for around 3 days in November. It was launched in 2012 as Australia’s answer to America’s Cyber Monday.
Another popular part of the Click Frenzy sale is the opportunity to buy products at up to 99% off during timed intervals. Examples include iPhones for $2, cameras for $3, and so on. The Click Frenzy website encourages visitors to sign up (by giving their email address and personal information) for updates on when the elusive sale items will be available, at which point they must scramble to add the item to their cart and be the first to checkout.
The problem lies in the fact that when brands run these types of sales, there is often a very limited supply of goods available at the advertised price. The advertising surrounding the sales is deliberately designed to excite and ‘hype up’ audiences. It leads them to believe they may be able to buy a product that retails for $1500 for $2, but the lack of true availability is what crosses the line into what the Australian Consumer Law calls ‘bait advertising’.
Bait advertising falls under Section 35 of the Australian Consumer Law. While the activity itself is not illegal, it carries certain stipulations. Bait advertising can in fact be a legitimate advertising tool when used correctly, but the illegalities arise when the advertised offer is not available in reasonable quantities, and/or when a ‘rain check’ offer is not provided.
A ‘rain check’ is an acceptable substitute product or service available to those who cannot purchase the product at the advertised price.
How can retailers comply with bait advertising laws?
Bait advertising is not illegal in itself. Businesses must be clear and upfront in their communications about the fact that the product or offer is in particularly short supply, in order to comply. Customers must be reasonably aware of the limitations to availability – which is where many businesses fall short.
Click Frenzy 2019 saw bedding brand Eva Mattress fall victim to a bait advertising fail when they advertised a bait campaign offering its signature mattresses for $1. After a massive influx of customers frantically trying to add the $1 mattresses to their cart, it soon transpired that there were only three mattresses available at this price. A follow up offer was provided to those who missed out, but at $750, the rain check discount was a far cry from the advertised price of $1.
In just hours, Eva Mattress’ social media channels were flooded with complaints. Hundreds of discerning commenters pointing out that the campaign was more of a competition than a sale, with others reporting that they’d had money taken from their account, in absence of the provision of any goods or services.
What are the consequences of bait advertising contraventions?
Eva’s mishap is a lesson to all Australian retailers to consider their obligations under the Australian Consumer Law before jumping onto fast-moving viral sale hype. Businesses found to be in contravention of bait advertising regulations could face fines in the hundreds of thousands, and suffer irreparable damage to their brand reputation. Despite several days passing since Eva’s blunder – and several apologies from the company on its social channels – the response from its audience remains hostile and untrusting.
Reach out to Jamie White at Pod Legal for advice on a current or prospective bait advertising issue in your organisation. Jamie has extensive experience in e-commerce law, and can help you deliver engaging sales offers that convert, without stirring up a storm with your customers or the ACL!