ACCC catches fake ‘free beer’ offer

Who’d believe it could happen in Australia ?  A trader advertising a ‘free beer’ special and bumping up the price of the main product to pay for it.

We thought fake ‘free beer’ ads were a myth.  After all, beer is sacred stuff.  Who would mislead the public about it ?  South Australian wine retailer Moving Juice, it seems.

The pitch

Moving Juice ran two campaigns in February / March 2008.

One offered a dozen bottles of wine for a price that included a slab of beer that was ‘free’, and even ‘absolutely free’.

The other was a ‘Was $x Now $y’ price comparison.

We’ve said it before:  ‘Free’ is a red rag to ACCC

Moving Juice is a small trader.  Maybe it thought it was below regulatory radar.  But using the word ‘free’ in advertising twigs ACCC’s interest almost every time.

So ACCC investigated.

What ACCC found

First, the dozen price had been increased to cover most or all of the cost of the beer.  So the beer wasn’t free.

Second, the wine had not actually been sold at the ‘Was $x’ price for at least two months previously.  The ‘Was $x’ price wasn’t a true recent selling price.

What ACCC required

To dig itself out of its legal problem, Moving Juice has given an enforceable undertaking that:

• it won’t use advertise false, misleading or deceptive representations with respect to the price of goods or services
• it will pay for corrective notices in The Adelaide Advertiser, its sales catalogue and on its website
• it will pay for an information notice in a wine industry magazine that will inform the industry of the ACCC action
• it will donate $2,000, an estimate of the profit from its conduct, to charity
• it will implement a Trade Practices compliance program.

The lessons for telcos and ISPs

‘Free’ or ‘bonus’ offers – or however else they are described – are common in the CSP sector.  As Crazy John learned in 2008, ACCC treats them very seriously.

Such offers will often provoke an ACCC ‘section 155 notice‘ that forces the trader to disclose detailed figures and other evidence that prove the ‘free’ claim truth or a lie.

And later this year, we expect many more of these claims to be challenged using a new Substantiation Notice power to be added to the Trade Practices Act 1974.

We normally advise advertisers to assume that any use of the word ‘free’ will be assumed by ACCC to be a lie.  The advertiser should only go ahead and use the word if it is confident it can disprove that assumption and prove the ‘free’ claim.