Fair Trading Minister Stuart Ayres said businesses sometimes offer cash back promotions to encourage consumers to buy their products but the process to reap the reward could be elaborate and in many cases, consumers would prefer the discount upfront.
“Cash back offers are a form of discounting where instead of marking down product prices, retailers maintain the price but offer to return some of the consumer’s money after purchase,” he said.
From 1 January 2013 to 12 March 2014, Fair Trading received 61 complaints and 17 enquiries about cash back offers. Most complaints related to electrical and electronic goods and appliances, with other complaints received in relation to furniture, building supplies and even cosmetics and toiletries.
Mr Ayres said consumers should be aware cash back offers were usually limited in time with special application conditions.
“Businesses using cash back offers must ensure consumers are not misled about the benefits,” he said.
“Saying a customer will receive cash back from a purchase when they will actually receive a gift card is potentially misleading and should be avoided.
”Advertising should be clear and carry the price before cash back, rather than the price after cash back.
A business operating a cash back promotion should make every effort to make the application process as easy as possible. It is disingenuous to make the process too long or cumbersome in the hope that claims will be abandoned. Terms and conditions, like a cap on the number of cash back offers available to be redeemed, must be clearly stated up-front.
“NSW Fair Trading will be conducting compliance checks around the state to educate retailers and make sure they are not misleading consumers with cash back offers.”
The maximum civil penalty for providing false or misleading information is $1.1 million for a corporation and $220,000 for an individual. Criminal penalties for the same amounts may also be imposed.