When the bargain isn't worth it - Dell fined $10 million for misleading consumers about discount prices
On 14 August 2023, the Federal Court ordered Dell Australia Pty Ltd, a wholly-owned subsidiary of US-based technology provider Dell Technologies Inc, (Dell) to pay a $10 million penalty for making misleading representations on its website about discount prices for add-on computer monitors.
The ACCC commenced proceedings against Dell after it was found that Dell had sold more than 5,300 products with add-on monitor pricing using misleading terms to describe overstated discounts on its website. The misleading terms used by Dell included: "Total Savings", "Includes x% off", "Discounted Price" and "Get the best price for popular accessories when purchased with this product".
This marketing strategy also involved placing a “strikethrough” of a higher price, indicating a significant saving was being made by consumers if they purchased the add-on in a bundle with another computer product. In some cases, the advertised add-on price was more expensive than if the monitor was purchased as a stand-alone product.
In addition to the $10 million penalty and other orders made by the Court, Dell was also ordered to:
make refunds to consumers who purchased goods the subject of the misleading advertisements;
appoint an independent compliance professional to review Dell's current consumer law compliance program; and
issue corrective notices to affected customers in the relevant period.
ACCC Commissioner Liza Carver noted that "This outcome sends a strong message to businesses that making false representations about prices or inflating discounts is a serious breach of consumer law and will attract substantial penalties."
In this case, Dell co-operated during the proceedings and made admissions, which may have helped reduce the potential penalty that Dell would have otherwise been exposed to.
The ACCC has prosecuted businesses and directors in recent months for breaches of competition and consumer laws in respect of which the Courts have ordered significant penalties, such as a $20 million penalty against Facebook owner Meta, a $60 million penalty against Google LLC and a $44.7 million penalty against Trivago.
See our article about increased penalties for breaches of Australian competition and consumer laws here.
How can we help?
It is imperative that business practices around pricing and marketing of consumer products in Australia comply with Australian competition and consumer laws.
Failing to comply with Australian competition and consumer laws has serious consequences for businesses and directors, including litigation, civil and criminal prosecution, penalties, class actions, disciplinary actions and damage to brand reputations.
If you require assistance or advice regarding your compliance obligations or if you have already received a communication from a regulator about your business practices, please do not hesitate to contact Suzanne Howari or Peter Wright.
The material in this article was correct at the time of publication and has been prepared for information purposes only. It should not be taken to be specific advice or be used in decision-making. All readers are advised to undertake their own research or to seek professional advice to keep abreast of any reforms and developments in the law. Brown Wright Stein Lawyers excludes all liability relating to relying on the information and ideas contained in this article.
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Peter Wright
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SuzannE Howari
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