By Bianca Lopez, Solicitor and Matt Hansen, Partner

26 July 2024

Australian retail giant, The Good Guys Discount Warehouse (Australia) Pty Ltd (The Good Guys), are under fire for allegedly making false and/or misleading representations to consumers between July 2019 and August 2023.

The Australian Competition and Consumer Commission (ACCC) have commenced proceedings in the Federal Court of Australia against The Good Guys for 116 promotions the retailer ran over the 4-year period, where consumers were offered a store credit for spending a certain amount on qualifying products. For each of the 116 promotions, The Good Guys undertook separate advertising campaigns, comprised of promotional marketing across The Good Guys website, social media platforms, digital catalogues, via SMS and eDMs, in print media and via third-party online advertisers.

Despite the extensive marketing for each of the promotions, the ACCC have alleged that The Good Guys made false and/or misleading representations to consumers as to the nature of the promotions. The ACCC have alleged that the conditions to obtain the store credit and conditions for use of any store credit, including applicable expiry periods, were not properly communicated. Further, the ACCC noted that a number of consumers did not receive the store credit from The Good Guys within the timeframe as promised, or in a reasonable timeframe.

The ACCC is seeking relief from the Federal Court on the basis that The Good Guys were in breach of sections 18 and 29 of the Australian Consumer Law (ACL) by engaging in misleading or deceptive conduct and making false or misleading representations to consumers.

Key promotion details must be front and centre to be enforceable

There were three main areas of The Good Guys promotions that gave rise to the ACCC’s claims. The first was in relation to the requirements for consumers to participate in the promotion and receive the store credit.

Following the ACCC’s review of The Good Guys marketing collateral for each promotion, the ACCC discovered that The Good Guys represented that consumers only needed to make a purchase of a qualifying product in order to receive the store credit.

An example of third-party online advertising for the store credit promotion from 2022 is below:

Image: Third-party online advertisement for The Good Guys promotion in 2022, obtained from the ACCC’s Concise Statement filed with the Federal Court.

From an initial review of the above advertising example, it is possible to see how consumers could form the view that purchases made across a range of products, within the relevant purchase price ranges, would see them awarded with a store credit. However, there was a qualifier to consumers participating in the guaranteed offer that was seemingly not present across the marketing material. Consumers not only had to make a qualifying purchase but were also required to opt in to receiving marketing communications to be eligible to receive the store credit. That is, consumers who did make a qualifying purchase but did not opt in to receive marketing materials would not receive the store credit.

While this information may have been included in the full Terms and Conditions for the offer, you can see from the above artwork example that the condition of opting in to receive marketing communications was not prominently communicated to the consumers at the same time or along with the other requirements to receive store credit. The ACCC alleges that the requirement to opt in to receive marketing communications was a significant or onerous condition (since compliance was mandatory to receive the offer) and it is necessary for such conditions to be clearly presented, so not to be misleading or deceptive or likely to mislead or deceive consumers.

Half the information is not good enough

The second concern raised by the ACCC was in relation to the expiry periods of the store credits. The ACCC’s review of The Good Guys’ promotions found that the store credits had very short expiry periods, with some expiring within ten days or less from the date of being awarded to consumers. While the short expiry itself may not be an issue, not clearly communicating that information to the consumers is.

The ACCC have alleged that not disclosing that the store credits were subject to an expiry period across the advertising assets for the 116 promotions created false, misleading or deceptive representations to consumers. Alternatively, the ACCC have claimed that the promotional advertisements not adequately disclosing the short expiry periods of the store credits caused a mistaken impression that the store credit would operate in a manner similar to all other gift cards. That is, the store credit would either not expire or would otherwise remain valid for a reasonable period of time.

Similar to the eligibility conditions discussed above, the ACCC alleges that the short expiry periods of the store credits were significant and onerous conditions of the promotions, and therefore required to be clearly set out across the marketing communications. By not including this information on the marketing material itself, even if this information is set out in the full Terms and Conditions, the promotional activity can be called into question for breaches of the ACL.

Prizes / rewards must be awarded as advertised

The final issue raised by the ACCC is that The Good Guys breached the ACL by failing to actually provide store credits to approximately 21,000 eligible consumers who participated in the promotion. According to the ACCC, these consumers had satisfied the conditions of the guaranteed offer, including making the required qualifying purchase, however were not provided the store credit within the time specified in the offers (or otherwise, within a reasonable time).

This highlights the importance of brands ensuring they have the ability to award the number of prizes or rewards they have advertised in their promotions. Open guaranteed offers such as this promotion can see a large number of consumers redeeming the rewards, and it is therefore necessary for brands and agencies to have the relevant processes in place to facilitate awarding high volumes of prizes or rewards to consumers.

We’ll say it again – you cannot use a disclaimer to cure an otherwise misleading message

We are aware that these types of guaranteed offer promotions are highly effective marketing tools for brands. In order to be successful campaigns, however, it is essential that all any significant or onerous limitations are clearly provided to consumers. There can be a tendency to try and use broad marketing language across promotional advertising assets, and then rely on the full Terms and Conditions or other disclaimers to further explain the actual detail of the promotion. However, it is essential to note that you cannot rely on a disclaimer or on the full Terms and Conditions as a tool to rectify messaging that is otherwise unclear or misleading. In addition, disclaimers themselves cannot be vague and relying on “T&Cs apply” or similar alone will not be enough to provide adequate qualification of significant claims.

In a recent press release discussing The Good Guys case, the ACCC made a point to state that consumers may have been driven to purchase products which they may not have otherwise purchased. The ACCC have further warned brands that terms of their promotions must be clearly and properly disclosed to consumers and must not be buried in hard to find locations.

Said another way, it is imperative that brands ensure all artwork and marketing collateral includes the details of the key conditions of promotions – such as eligibility requirements like opting in to receive marketing communications, and also short expiry periods of rewards that will affect consumers. While the full Terms and Conditions must also be an accurate and detailed explanation of the promotions, the artwork = should also ensure that these key terms or conditions are presented clearly to consumers to avoid the risk of being pursued by the regulator, as we are seeing play out here.

Contact us

Given the recent action against The Good Guys, it is important now more than ever to ensure that your Terms and Conditions are full and accurate and, equally, that the artwork advertising the promotion is clear and includes all relevant key information.

We have a dedicated team of brand promotion experts ready to assist with your promotional activity. If you would like further information or advice on your proposed promotional concepts, or if you would like assistance with drafting promotion Terms and Conditions and reviewing promotional advertising materials, please contact one of our experts below.