ACCC clamps down on misleading store credit and ‘StoreCash’ promotions

Here, lawyers break down the ACCC’s recent proceedings in the Federal Court against The Good Guys Discount Warehouses (Australia) (The Good Guys).

Partner Joanne Jary, senior associate Caitlin Waldron, and undergraduate Anneliese Castle from national law firm Holding Redlich broke down the Australian Competition and Consumer Commission’s (ACCC) recent proceedings that commenced in the Federal Court.

“[Proceedings recently took place] in the Federal Court against The Good Guys Discount Warehouses (Australia) Pty Ltd (The Good Guys) for allegedly misleading consumers about its store credit and StoreCash promotions, and then failing to provide store credit to thousands of eligible consumers,” said Jary, Waldron, and Castle.

“During the promotional period, The Good Guys ran 116 store credit and ‘StoreCash’ promotions, offering consumers store credit or ‘StoreCash’ for purchasing goods of a specified value.”

“These promotions were advertised through separate campaigns on its website and social media platforms, as well as through web push notifications, SMS messages and emails, digital catalogues, print media, and third-party online advertisers.”

Jary, Waldron, and Castle explained the allegations that the ACCC made against The Good Guys.

“The ACCC alleges the advertisements for the promotions were misleading because consumers were required to opt-in to receive marketing communications. The Good Guys told consumers that the only requirement to qualify for the store credit promotion was to make purchases of a minimum value during the promotional period,” said Jary, Waldron, and Castle.

“The ACCC alleges this was misleading because each promotion was subject to consumers opting-in, and consumers would only receive a store credit if they opted-in (and remained opted-in) to receive The Good Guys’ marketing communications.

“Additionally, the store credit had an expiry date even though consumers were told the store credit or StoreCash provided would not expire or would remain available to use for a reasonable time. The ACCC alleges this was misleading because the store credit and StoreCash expired from as short as seven days to 92 days, while their advertisements did not adequately disclose that the promotions were subject to the credit-expiry condition.”

On top of this, the ACCC also alleged that The Good Guys’ advertisements failed to disclose opt-in and credit expiry conditions. It’s also alleged that close to 21,000 consumers did not receive the promised store credit within the specified time frame.

Jary, Waldron, and Castle reviewed the penalties and compliance orders that the regulator is seeking in this case.

“The regulator is seeking consumer redress, penalties, declarations, compliance orders, publication orders and costs. If successful, The Good Guys could face significant financial penalties,” they said.

“For contraventions that occurred after November 2022, the Australian Consumer Law allows fines of up to the greater of $50 million or three times the value derived from the relevant breach, or, if the value derived from the breach cannot be determined, 30 per cent of the company’s turnover during the period it engaged in the conduct.

“The conduct alleged by the ACCC against The Good Guys straddles the introduction of these higher penalties.”

This case is not the only one sweeping headlines that the ACCC is involved in. Both Coles and Woolworths engaged in alleged price gouging, as Jary, Waldron, and Castle referenced.

“The ACCC has recently received additional funding for investigations and enforcement relating to the supermarket and retail sector,” they said.

“As the ACCC continues to crack down on misleading advertising and pricing practices, retailers across Australia must remain vigilant in their compliance efforts. The Good Guys case serves as a crucial reminder that transparency in marketing is not only a best practice; it is a legal obligation.

“This is especially relevant considering the ACCC’s recent legal action against Coles and Woolworths for allegedly misleading discount promotions. The ACCC’s expanded funding reinforces the importance of ensuring that all promotions are transparent and compliant. Retailers should take this as an opportunity to review their practices and safeguard their business from potential regulatory risks.”

To avoid similar pitfalls as The Good Guys, Jary, Waldron, and Castle offered businesses some clear guidelines on how they can ensure that their promotional practices aren’t breaching the law.

• Ensure that all promotional materials clearly outline any terms and conditions. Avoid fine print that may mislead consumers about the true nature of the offer.
• Promotions should reflect genuine offers that provide real value to consumers. Avoid exaggerated claims that could lead to misunderstandings.
• Ensure that all staff are knowledgeable about promotions and can accurately explain offers to customers, helping to avoid potential confusion at the point of sale.
• Conduct regular audits of marketing and promotional practices to ensure compliance with consumer law and address any potential issues before they escalate.