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ACCC chairman, Rod Sims
ACCC chairman, Rod Sims

After Zamel’s, ACCC targets online retailers

In what might be considered good news for traditional jewellers, after gaining a second conviction against Zamel’s, the ACCC has announced that it will be targeting online retailers who mislead consumers. 
After being found guilty of misleading consumers, Zamel’s Jewellers said in a media statement it would appeal its Federal Court conviction and $250,000 fine handed down last week, describing the court’s decisions as “very disappointing”. 

The Federal Court imposed the penalty on The Jewellery Group Pty Ltd, trading as Zamel’s, for misleading consumers about savings made on jewellery, following action brought by the Australian Competition and Consumer Commission (ACCC).
“The judgment has been acknowledged by the ACCC to have significantly extended the law in this area. Zamel’s has at all times acted in a way that it believed was compliant with its legal obligations, and consistent with widespread industry practice,” the media release stated. 
ACCC chairman Rod Sims disagreed. Speaking to Jeweller, he said the Zamel’s case was unique and different to the first Zamel’s case in 2009 where the retailer was fined $380,000 for misleading consumers.

Rare sales
“The unique thing about this case is that, unlike the previous case where Zamel’s said something was sold at a previous price when it was never sold at that price, in the latest case, while some of the jewellery items were never sold at the “was” price, some were [sold at the higher price] but very, very rarely. 

“So what was tested was the fact that they had been in the vast minority of occasions sold at that [higher price], and did it make a difference? And the court found because the higher price was rare, it was a misrepresentation to consumers.”

Essentially, the issue comes down to the fact that even if a retailer has offered the item at a higher price, and sold a few items at that price, the court will determine whether the number sold was reasonable to represent savings to consumers. 

Zamel's Jewellers, busted twice by the ACCC for misleading consumers
When contacted by Jeweller, the spokesman for Zamel’s, Chris Rann, reiterated the company statement saying, “Zamel’s has always sought to bring the best value to consumers and market its value proposition in accordance with the law. The judgment has significant implications for all of retail in Australia,” but he declined to explain the implications or to make further comment. 

Sims said the Zamel’s case was important because the promotion it ran was systematic and widespread. 

“Zamel’s distributed 3.4 million catalogues to homes, they published other catalogues and flyers and it occurred between 2008 and 2010, so it was widespread and went on for some time.

“And, of course, Zamel’s is a large company with around 100 stores, so we were concerned that it was quite detrimental to consumers and they might be enticed to buy something they might otherwise wouldn’t have bought without shopping around because they thought they were getting such a good deal.”

Warning for online retailers
Jeweller questioned Sims whether high profile bricks and mortar retailers like Zamel’s were more open to ACCC scrutiny because of their national promotional activity (catalogues, TV and print advertising) compared to online retailers that might fly under the radar with their discount marketing tactics. 

Sims denied that online retailers were viewed differently to traditional retailers, adding, “The ACCC is increasingly placing more focus on online retailers and websites. In part, we react to what we get complaints about which drives a fair bit of our investigation. But we are becoming more proactive on things like the online area, which is one we are taking an increasing focus on. 

“I have foreshadowed that this year the ACCC will be focusing on online group-buying sites and fake online reviews as two particular consumer issues.” 

That might be good news for Australian jewellery retailers, many of whom believe that some advertising tactics of online retailers, especially auction sites like eBay and Graysonline, and the more recent group-buying sites, put them at an unfair competitive advantage.

Ironically, Sims said that ultimately court decisions like the Zamel’s case were good for the industry. 

“The ACCC has two concerns. The first is obviously for consumers but we are also concerned for those businesses who are doing the right thing. They’re disadvantaged by people who are misleading consumers so we are very much concerned about the anti-competitive effects of misleading consumers in that it favours people doing the wrong thing.”
“We’re weeding out behaviour that misleads consumers, and that levels the playing field,” he said. 


Ellendale Diamonds Australia

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