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BusinessJanuary 9, 2019

How $14.99 plus ‘FREE’ can really mean $614.96


How honest do advertisements really need to be? Madeleine Chapman investigates a newspaper ad promising a price of $14.99 when the real cost is far, far more.

The best advertisements make you stop. Sometimes because they’re funny, or fun to look at. Sometimes because they’re inspiring. And sometimes, though less often, because they offer a deal or a price that’s simply unbelievable. If an ad makes you stop, even if just for a moment, it’s worked.

In the New Zealand Herald, at least once a week, there’s an ad that makes me stop. It’s always the same ad, occupying the bottom three inches of a page otherwise filled with world news. Unlike the TripADeal ad over the page featuring Dan Carter, this one offers no celebrity endorsement. It barely even offers a brand name. In large white block letters on a red background, the ad screams “ROAST A CHICKEN IN HALF THE TIME!”

How much for this “Taste the Difference air roaster”, a machine that looks not unlike a bread maker? “ONLY $14.99” on a “30-day risk free trial”. But on closer inspection, the reader will see “+P&H*” in small lettering below the price. P&H is commonly understood to mean postage and handling, while the asterisk suggests more fine print. That fine print can be found by scanning the rest of the ad until one finds “*terms & conditions apply” in tiny lettering next to two large, red “FREE” texts. There’s a lot going on in this ad.

As a person of reasonable intelligence (thank you, please, don’t get up) I looked at that ad and surmised that for the price of $14.99 + postage, I could purchase an Air Roaster – or at the very least I could trial it for 30 days without the risk of further cost. Like every “as seen on TV” deal, it sounded too good to be true.

It was.

The ad offered no website and no physical address, only an 0800 phone number. “Thank you for calling the TV Shop. Your call is important to us…” When I eventually graduated from an automated recording to a human voice, a customer service representative immediately began a scripted sales pitch for the product. I could feel her eyes through the phone, frantically scanning the brief on her computer as she read aloud that the Air Roaster can house a whole chicken.

Before I could question the $14.99 trial offer, she went through it at speed. “We have an option where you can try it first before you commit. All you pay today is $64.97 which includes your processing and handling and delivery.” Wait a minute. Not only was the trial a lot more than $14.99, the added cost wasn’t even solely for postage, it was for ‘processing’, a word with as much tangible meaning as ‘thought leader’.

“If you’re happy with your 30 day trial, you have four interest free monthly payments to take care of the rest. If you do that it’s $32.36 a week, $68.75 a fortnight, or $137.50 a month. Total costing of $614.96. If you wanted to purchase it outright today the total cost would be $599.97.”

I did not want that. I wanted a $14.99 30 day risk free trial with free recipe book and free blender. And I could get all that, just not for $14.99. When I mentioned the advertised price, the woman on the line confirmed it to be correct, before adding “plus your processing and handling of $49.98 for your Air Roaster and your nutrient fusion that you’re getting for free as well, with processing and handling of $9.99. So $64.97’s the first payment.”

My head was spinning. How can they be allowed to advertise a product (or trial) at one price then charge a different price that isn’t remotely close to the advertised one? It seems there’s a grey area where they happily reside. That asterisk after the “+P&H” on the ad is doing a lot of heavy lifting. And even if you could easily think you were looking at the price for the product, they could point to the ad offering literally not ownership but a “30 day risk free trial”.

A spokesperson from the Advertising Standards Authority said that while the practice is certainly questionable, the ad itself may not be misleading. “What is the ad for? The ad is for a trial for an Air Roaster. There’s other stuff that happens after that but that’s outside our jurisdiction,” said the spokesperson.

“I think most people now – particularly when you think about TradeMe and online sales in general – people are much more aware that there’s often some sort of postage cost.”

Postage cost, yes, but $50, even for a weird Air Roaster, is steep at best. But other New Zealanders don’t seem to care. “We haven’t had a complaint about the print ad,” said the ASA spokesperson.

How about the Commerce Commission? They’ve also received no complaints about the Air Roaster $14.99 / $64.97 / trial.

“We have not received any complaints about the advertisement,” said a spokesperson, though, according to the commission’s regulations for traders, one would not be unwarranted.

“Generally speaking, when consumers see an advertised price for a good or service, they are entitled to assume that that price is the full price they will be expected to pay. Fine print should not be used to disclose additional costs or charges associated with a purchase. Stating that ‘conditions apply’ will not protect traders when the conditions are unusual, inconsistent with, or modify, in an unexpected manner, the main message. Fine print can elaborate on the main selling message, but not contradict it.”

The TV Shop is currently advertising in the New Zealand Herald an Air Roaster for $14.99* on a 30 day risk free trial. It is impossible to trial the product for anything less than $50. But at least it’s risk free, right? Isn’t the possibility of taking on a debt of more than $500 should you fail to return it in time, well, a risk? You might see $14.99 but forget about it for 30 days and you’ve just bought yourself a $615 glorified microwave. At present, you can buy a free-standing oven from Smiths City for $549.

From the TV Show seller: “If you’re not happy just give us a ring before your 30 days are up and we’ll give you a refund of your risk free trial less your processing and handling.”

Less your processing and handling. After paying $64.97 for a “risk free” trial, you’ll also have to pay postage to return the product if you’re not happy (or can’t afford more payments) in order to get your refund of … $14.99.

So that’s what the price on the ad meant.

Keep going!