Fair Trading Act

Farmer Freddy and the Fair Trading Act


“Hey Pebbles, come have a look at this,” beckons Freddy as his daughter strolls past the kitchen.

“I’ve been searching the web for new irrigation hosing and have just spotted what looks to be an incredible deal,” continues Freddy as he keenly studies his iPad.

“You’re getting pretty good at finding the bargains aren’t you, Dad,” comments Pebbles as she peers over his shoulder. “What site are you looking at?”

“I haven’t heard of them before but it looks like they’ve been around for a while and they have free delivery. And look at this,” continues Freddy as he flicks to the next page. “There’s a sale for $100 off their normal price!”

“That certainly does sound like a big savings, but is it a good deal?” queries Pebbles as she takes the iPad from her Dad.

“What do you mean? Of course it’s a good deal; I would be saving $100!”

“Yes, I can see the savings on the screen, but look at what the normal price is – would people really pay that?” asks Pebbles.

“Well, no, I certainly wouldn’t pay full price but I don’t have to because they’re offering the discount.”

“What I’m getting at,” explains Pebbles, “is that some businesses try to trick people into thinking they’re getting a good deal by inflating their “normal” price and then offering a discount, even though they don’t expect people to ever buy the item at the “normal” price.”

“Do they really do that?” asks Freddy.

“Yes, some do, and what those businesses might not realise,” continues Pebbles, “is that by doing so they’re actually breaching the Fair Trading Act.”

“How so?”

“The problem is that they’re misleading, or potentially misleading, people as to the savings which can be made. People see the sale advertised and assume that if they buy the item at that price it will cost them less than what they would otherwise have to pay. But the “normal” price is set high to make the discounted price look good; and because no one would ever buy the item at the exorbitant “normal” price, it’s not the normal price at all,” explains Pebbles.

“It is the same as saying “was $100, now $50” when in fact that most recent price the business was selling the item for, before the sale, was $80. It’s quite simply incorrect.”

“Do you think that’s what this website has done?” asks Freddy.  “Inflated it’s normal price so that it can attract people like me by making us think we’re making a savings?”

“Not necessarily, but you do need to be careful. Look at other sites to see how much they’re offering the irrigation hosing for and call a local retail outlet. If, after all of that, you think you’re still getting a good deal, go ahead with the order. But don’t rush into it just because the site tells you that you’re saving money,” advises Pebbles.

“That sounds like a good plan, Pebbles. I will definitely make some calls and see what the local supplier is selling it for. If they can do a similar price I would prefer to buy it from them anyway,” continues Freddy as he heads over to the kettle. “You know, for a young lawyer you certainly do know a lot.”

“Not really. I just want you to get the best deal you can,” replies Pebbles.

The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document. 

If you would like more information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser. 

 

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