Bike Barn fined $800k over misleading ads

Friday 10th February 2017

Bike Retail Group and Bikes International, the joint operators of the Bike Barn cycle retailer in New Zealand, have been fined $800,000 in the Auckland District Court today for running an advertising campaign that misled consumers in the way it portrayed discounts.

The two firms pleaded guilty to a combined 18 representative charges over marketing between July 2013 and June 2015 which created misleading impressions about the discounts available to consumers, the Commerce Commissions said in a statement.

"Bike Barn used exaggerated discounting strategies that gave the impression to customers that they were purchasing bikes at significant mark-downs from the normal retail price – typically 50 percent off. It also advertised clearance specials that created an impression that the discounts were available for a limited time only," commissioner Anna Rawlings said. "Neither was true. 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."

Bikes International, the immediate parent of Bikes Retail Group, is ultimately owned by the estate of Richard White. It was set up in 2004.

The regulator said the $800,000 fine imposed by Judge Mary-Beth Sharp is one of the largest delivered under the Fair Trading Act.

The retailer changed its advertising and discount strategy in response to the regulator's investigation, the commission said.

BusinessDesk.co.nz

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