10 Feb 2017

Bike Barn fined $800k for misleading pricing

6:03 pm on 10 February 2017

The joint operators of the Bike Barn retail chain have been fined $800,000 for misleading pricing.

Out of nearly 6000 bikes investigated by the Commerce Commission, only 30 were sold at the so-called full price (file photo).

Out of nearly 6000 bikes investigated by the Commerce Commission, only 30 were sold at the so-called full price (file photo). Photo: 123RF

They had earlier pleaded guilty in the Auckland District Court to 18 charges under the Fair Trading Act over marketing and sales conduct between July 2013 and June 2015.

The Commerce Commission said Bike Barn attracted customers by using exaggerated discounting strategies and advertising clearance specials, which gave the impression that the discounts were available for a limited time only.

"Neither was true," commissioner Anna Rawlings said.

"In fact, the discounted prices were Bike Barn's usual selling prices. Out of nearly 6000 bike sales we analysed during our investigation, only 30 were sold at the so-called full price."

The commission said the "final days" wording in Bike Barn's advertising gave the impression the promotions were about to end and created a misleading sense of urgency.

It said the products were commonly available at the same price before and after the advertised sales.

In sentencing Bike Barn, the judge said Bike Barn's conduct was "pervasive" and "calculated".

The fine is one of the largest handed down under the Fair Trading Act.

The Commerce Commission said Bike Barn changed its advertising and discount strategy in response to the investigation.

In a statement, Bike Barn apologised for any confusion caused by its advertising during that period.

The statement said the company cooperated fully with the Commerce Commission and voluntarily changed Bike Barn advertising in late 2015 to address the Commission's concerns.

Bike Barn has 15 stores around New Zealand.