Online florists display beautiful bouquets for sale at low prices on their websites. The competition is fierce and so florists push the boundaries of the Australian Consumer Law in their online advertising. But they must be careful because the Australian Competition & Consumer Commission (ACCC) will come down hard if they cross the boundaries of the law.
In proceedings brought by the ACCC, the Federal Court of Australia has ordered online florist Bloomex pay a penalty of $1 million for misleading the public by advertising in breach of the Australian Consumer Law, in these ways:
- Strikethrough Prices
- Star Ratings
- Price Surcharges
This is an analysis of the Court’s decision, which was reported as Australian Competition and Consumer Commission v Bloomex Pty Ltd [2024] FCA 243 (Anderson J) (15 March 2024).
Michael Field adds his marketing commentary at the end.
The Bloomex business
- Bloomex was established in Canada in 2005. It started trading in Australia in 2011. The Australian operation is managed from Canada.
- Bloomex is an online floristry and gift retailer, selling floral bouquets, arrangements or wreaths, individual flowers, gift hampers and other items in Australia through its Website. The website has about 1.5 million visits per year.
- Bloomex has a direct-to-customer business model, buying directly from growers and suppliers, and selling online to the public through its website, at lower prices than its competitors who buy through wholesalers and retailers with shopfronts.
- Households, wedding venues, funeral homes and corporate clients are key markets.
- Bloomex is one of the largest florists in Australia. In the 2022 Financial Year, sales were $16.065m and gross profit was $3.186m from 187,399 orders of which 165,115 were website orders.
Fail #1 Strikethrough Prices
The ACCC called this the ‘Discount Representations’.
An example of a bouquet for purchase on the website is:
 Bloomex Bouquet web image |
The Strikethrough Price in the web image is $120.00, the purchase price is $60.00. ‘YOU SAVE: $60.00’ is added for emphasis underneath.
Between 26 February 2019 and 2 November 2022, almost all of the 730 Products advertised for sale on the Bloomex Website had a Strikethrough Price and a purchase price which was 50% (i.e. half) of the Strikethrough Price.
There were three versions. In the first, only the Strikethrough Price appears. In the second, the ‘YOU SAVE’ tag was added underneath. In the third, a ‘Compare at’ tag was added before the Strikethrough Price. These are the images:
 First Version |
 Second version |
 Third Version |
The Strikethrough Prices were removed from the website when the ACCC commenced the proceedings.
The problem was that the Strikethrough Prices were prices that according to Bloomex were “the usual market prices available elsewhere” and were therefore fictional as they were not the prices Bloomex had charged in the past.
Section 18(1) of the Australian Consumer Law prohibits misleading or deceptive conduct.
Section 29(1)(i) of the Australian Consumer Law prohibits making a false or misleading representation with respect to the price of goods.
Fail #2 Star Ratings
The ACCC called this the ‘Star Rating Representations’.
The star ratings consisted of an image of five gold stars (see images above) followed by a number.
The star ratings system was not accurate for three reasons: it was based on customer reviews that were last updated in January 2015; they included customer reviews for products sold outside of Australia; and they were not limited to purchasers but included reviews by visitors to the website.
Bloomex tried to overcome these inaccuracies by including an explanatory statement, in an initial attempt to satisfy the ACCC.
The star ratings and explanatory statement were removed from the website when the ACCC commenced the proceedings.
Section 29(1)(a) of the Australian Consumer Law prohibits making a false or misleading representation with respect to (a) that the goods are of a particular standard or quality; and 29(1)(g) prohibits making representations that the goods have particular performance characteristics or uses or benefits and/or approval.
Fail #3 Price Surcharges
The ACCC called this the ‘Total Product Price Representations’.
A surcharge of between $1.95 and $4.95 per order applied to each delivery, the amount depending on the delivery postcode and the delivery date. The total collected was substantial. Between 10 August 2022 and 22 March 2023, Bloomex collected $317,802 (including GST).
The ACCC requires the purchase price displayed be the total price (or single price). If you examine the first bouquet image, the total price is $60. There is no mention of a delivery surcharge. It was not until the customer had progressed through several webpages before arriving at the “Express Checkout – Billing” webpage, that the delivery surcharge was mentioned.
The purchase price displayed was therefore a misleading product price representation.
Bloomex ceased to apply a surcharge to deliveries when the ACCC commenced the proceedings.
Section 18(1) of the Australian Consumer Law prohibits misleading or deceptive conduct.
Section 29(1)(i) of the Australian Consumer Law prohibits making a false or misleading representation with respect to the price of goods or services.
Section 48(1) of the Australian Consumer Law provides that the single price displayed must include all fees payable by the consumer as part of the transaction. There is an exception if the charge is a delivery fee, but the minimum fee must be specified where the single price is displayed: see section 48(2) and (3).
Breaches of the Australian Consumer Law and court orders
Bloomex admitted the breaches of the Australian Consumer Law, and so the proceedings were to determine the penalty. The ACCC argued for $1,500,000 while Bloomex argued for $350,000.
The Court found:
- While Bloomex did not deliberately intend to mislead, the representations formed part of a considered marketing strategy.
- The Discount Representations and the Star Rating Representations are serious in nature because they were ubiquitous and on the website for four years.
- The Total Price Representations were less serious because the price surcharge represented the actual delivery cost and it was charged for a short period.
The Court imposed a civil penalty of $1 million for the admitted contravening conduct, made up as follows:
(a) Discount Representations: $400,000;
(b) Star Rating Representations: $400,000; and
(c) Total Product Price Representations: $200,000.
In addition, the Court ordered an injunction so that the conduct was not repeated in the future, ordered that Bloomex establish a compliance program and pay the ACCC’s legal costs.
The ACCC comments
In the ACCC Media Release Online florist ordered to pay $1 million for misleading online star ratings and price representations, the ACCC comments on the decision.
“Bloomex misled consumers about the quality and price of its products for a long time, and this penalty is an indication of how seriously the court views this conduct,” ACCC Commissioner Liza Carver said.
“The ACCC focuses on investigating manipulative or deceptive advertising and marketing practices in the digital economy, where it is often harder for consumers to verify claims made by businesses.”
“Misleading online reviews and star ratings are an issue of significant concern to us because they can influence consumers into purchasing from a business, when they would not otherwise have done so,” Ms Carver said.
Marketing Commentary by Michael Field from EvettField Partners
A Bouquet of Marketing Blunders
Flower retailing in Australia is a $1.1 billion industry. More than 2,893 businesses compete for market share in a hotly contested market including online sites and physical retail stores such as convenience stores, florists, and petrol stations.
“Consumers want to buy quality flowers, at the right price, while spending the least amount of time in the purchase process.”
Consumers are spoiled for choice in a ‘low involvement’ purchase, as ‘buying occasions’ where consumers buy flowers:
- occur infrequently, and are often ad-hoc;
- are triggered by external events such as births, weddings, and funerals;
- the ‘buying window’, or time spent in the buying process is often time-constrained, meaning purchase decisions are calculated in minutes and seconds.
Here is a quick compliance checklist for marketers:
Best Practices Checklist for Compliance with Consumer Law:
- Price Transparency: Ensure that all pricing, including any potential surcharges, is clearly displayed from the initial point of customer interaction. Avoid using strikethrough prices unless they represent a genuine past selling price.
- Accurate Representations: All claims about products, including quality and customer ratings, should be based on current and verifiable data. Avoid outdated or irrelevant testimonials that may mislead consumers about the product's performance.
- Disclosure of Additional Costs: Clearly state any additional costs, such as delivery fees, on the initial product page to avoid surprises at checkout. Comply with the requirement to display the single price.
- Regular Review and Compliance Checks: Implement regular reviews of marketing materials and website content to ensure compliance with consumer law. The ACCC website has good advice on compliance. If in doubt, ask a lawyer to review.
- Customer Feedback Integration: Use genuine customer feedback to inform product ratings and descriptions. Transparently show how ratings are calculated and disclose the origin of the reviews to enhance credibility.
Conclusion
Although the Court found that Bloomex did not deliberately intend to mislead, Bloomex was ordered to pay a $1 million penalty as their representations formed part of a considered marketing strategy.
This penalty is a timely reminder for marketers that compliance is not optional. Ensuring your marketing activity is compliant should be part of every marketers checklist.
If your business sells online, don’t do what online florist Bloomex did by advertising strikethrough prices that were never charged, star ratings not updated for five years, and hiding delivery charges. These are breaches of the Australian Consumer Law, for which Bloomex was ordered to pay a $1 million penalty.