A company has been fined $840,000 for lying to customers over its one-day deals.
Judge Peter Winter ruled deal site 1-Day, which offers limited-time deals on a range of goods, misled customers into believing a product's stock was running low to create pressure to purchase via fear of missing out. In fact, stock was often plentiful.
Graphics displaying the number of goods was programmed to countdown throughout the day.
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The site's "1-day" deals were often run over multiple days, with consumers kept in the dark about how long the offer was available.
During sentencing at the Auckland District Court on Wednesday morning, Winter said the purpose was to rush shoppers into making a snap decision.
"Effectively, it's a pressure-selling business model," he said.
“The misleading conduct was, therefore, a central plank of the defendant’s business strategy.
“The defendant’s conduct gave it an unfair advantage in the marketplace over its competitors."
The Commerce Commission laid eight representative charges under the Fair Trading Act for the company's conduct stretching from 2016 to 2020.
Commission General Manager of Fair Trading, Vanessa Horne, said that the company intentionally gave the impression that goods were only available for a low price for a limited time.
"Neither of these things were true and on many occasions, the goods were available at the same price the next day," said Horne.
She cited an example of 2000 Apple Earpods 1-day had in stock, only 100 of which were sold during the first day of its sale.
But reading the website at 10am the next morning, customers were led to believe they had only between 10% to 19% of the product stock left.
The Apple Earpods were also advertised as a daily deal, despite selling for 33 days.
"In a physical store, we wouldn’t expect a retailer to say there’s one item left when a number of items remain on the shelf or in the stockroom. The same goes for online," said Horne.
The company, now owned by The Warehouse Group, told 1News it accepts the court's findings and takes its "obligations under the Fair Trading Act seriously".
"The implementation of these features was prior to our ownership, and these features were corrected in June 2020, after they were raised by the Commerce Commission," said a company spokesperson.
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