Online auction retailer GraysOnline has recently been advertising its jewellery sales arm on print and radio mediums, stating consumers could “expect to save over 50 per cent on the finest diamond jewellery”.
GraysOnline is promoting a number of jewellery “brands” including Castellani, Tate & Co, Jacobs and Dolchess.
It is unclear where the 50 per cent savings come from, given neither the website, nor the print advertisements list a ‘was’ price. But it does promote jewellery valuations on the website listings and therefore these supposed savings could appear to be based on the valuations prepared by the Valuation Centre of Australia (VCA) – a National Council of Jewellery Valuers (NCJV) member, employing three registered valuers.
According to the GraysOnline advertisements, all jewellery offered on the site was valued by VCA and came with a VCA valuation certificate.
An example from the website was a 1.21-carat diamond ring which, as stated on the web page, was valued at $10,595. The “ current bid” for the ring at the time of writing was $1,409.
The Australian Competition and Consumer Commission (ACCC) has previously advised that it had concerns about jewellery retailers using valuation certificates to deceive or mislead consumers into believing they were achieving a genuine saving, based on a valuation price that was not truly indicative of the re-sell price of the item.
According the ACCC’s Industry Checklist for Jewellery Manufacturers, Wholesalers, Retailers and Valuers, retailers were likely to be in breach of the Trade Practices Act if they, “use a valuation in price comparative advertising – for example: ‘valued at $150, now $100’ – but the valuation does not indicate the true ‘worth’ or normal selling price for the particular piece of jewellery in that particular market”.
“Quite often, a valuation is used to say ‘something is worth this amount, we’re selling it for this’, and there’s an implied saving based on that representation,” said Sarah Proudfoot, small business and outreach director, ACCC.
“Retailers have to be really careful if they do that, because it’s creating an impression that the consumer’s making a saving on what they’re purchasing, and in reality, the retailer may not be able to negate the impression that the valuation shows the price of the jewellery in the market where the consumer’s buying at the time. And so it may be giving a false impression of the saving they’re making.”
Proudfoot said this applied to both online and bricks-and-mortar retailers.
The ACCC advises that retailers using valuation certificates to sell items should inform consumers that valuation prices were intended to indicate “retail replacement value” and not necessarily the re-sell value of the item.
“In the guide, the ACCC suggests valuers tell consumers that a valuation is provided for the retail replacement, and doesn’t necessarily reflect what they would receive if they were to resell the item,” Proudfoot said.
Referring specifically to online retailers, she added, “Retailers would need to take care if they were using a valuation price to indicate ‘this is worth this’, and then getting people to bid on that amount if it wasn’t clear that was the retail replacement valuation and not the price the consumer would be able to re-sell the product at.”
Not disclosing this information, according to the ACCC, could mean the retailer was guilty of misleading and deceptive conduct.
According to Proudfoot, it all depended on what the consumer was lead to believe – the impression they were left with – and this would come-down to the way the price was promoted.
“If the buyer bought that product for $500,” she said, “they may, because of the way it was promoted at being valued at $7,000, have been given the impression that they’ve made a saving of $6,500. If the consumer understood that the valuation was a retail replacement for insurance purposes, and that it didn’t mean they were going to be able to go out and sell the item for $7,000 and make profit, that would be one thing, but if they’ve been mislead by the way the representation was made, then we have concerns.
“By calling something a valuation, is the retailer creating the impression that that’s something the consumer could walk away with and sell that product at tomorrow, or that it’s worth a set amount, or are they making it clear that this is a valuation that has been provided for retail replacement purposes, which most people would take to mean a higher figure than necessarily the product would sell for?”
The GraysOnline print advertising does not explain this fact, but the website does offer an “About Valuations” link to each item listed. Many of the jewellery pieces being offered, however, appear with headlines such as, “Val – $10,595”. It is unclear why the specific word “valuation” constantly appears abbreviated on the website.
JAA CEO, Ian Hadassin is also concerned that the purported “savings” advertised by GraysOnline may not be truly indicative of the online price of the items, and more importantly, if the products have not previously been sold in Australia at a higher price, then there can be no saving at all. That may raise another issue for the ACCC’s consideration.
The ACCC’s Advertising and Promotion in the Jewellery Industry document states: “If a retailer uses valuations in the sales process to indicate a saving – for example ‘Valued at $1,500, Now $1,000’ – consumers may reasonably expect that the valuation indicates the ‘worth’ or normal price for the particular piece of jewellery in that particular market (internet, auctions or traditional shop front).
“Businesses risk contravening the Act if they use valuations, other than technically correct, well-prepared valuations that are appropriate for that particular market and its appropriate function/monetary level, including geographical area. If a retailer uses a valuation that is inappropriate in the circumstances then the retailer risks allegations that they have made false representations and engaged in misleading and deceptive conduct.”
Hadassin goes much further. He believes that valuations should not be used at all for price comparison purposes.
“It’s not ethical and we would not allow any of our members to do that,” he said.
Indeed, the eighth draft of the proposed JAA Code of Conduct, recently released for comment, states that “Valuations are not considered to be an appropriate or accurate method of determining the market price, at the time of sale of a new piece of jewellery. Valuations are only appropriate in determining the market value of pre-owned jewellery and timepieces, and valuations for this purpose should only be carried-out by valuers registered by the National Council of Jewellery Valuers (NCJV). Code Participants shall not use or refer to any valuation value in conjunction with comparative-price advertising.”
Hadassin said the decision by GraysOnline to highlight its use of the VCA’s valuation certificates in its advertising was of concern to him as soon as he saw it – prompting him to raise the matter with the NCJV.
“The NCJV said they would write to the VCA to investigate what its member is doing,” Hadassin said.
NCJV NSW, executive officer, Graham Easy confirmed the council was currently in discussions with VCA over its involvement with GraysOnline: “The committee is currently looking into the issue,” he said.
Hadassin has since confirmed that the JAA is preparing a formal complaint to be lodged with the ACCC, which could include a complaint against the valuer.
While the NCJV’s discussions with VCA are on-going, valuers should be most concerned about their conduct, because the ACCC could take action against any valuer if it was “knowingly involved in aiding, abetting, inducing or conspiring in conduct which breaches the Trade Practices Act,” according to the Industry Checklist for Jewellery Manufacturers, Wholesalers, Retailers and Valuers.
Proudfoot clarified the matter: “If the valuer is knowingly concerned with a breach – if they know the retailer is using the valuations in a misleading and deceptive way and do nothing to prevent the misuse, then the valuer may also knowingly be concerned in the contravention.”
When asked whether it was of concern that GraysOnline gave all of its valuation work to VCA, Proudfoot said, “No, unless the valuations were being misused or shown that they were vastly different from general industry valuations. For example, if that valuer was generally valuing items on the higher side of a valuation; if they were out of kilter with industry, for example.”
Jeweller sought an interview with GraysOnline in order to clarify some of the practices and, at first, marketing manager, Mark Kehoe was happy to participate – suggesting an interview with Cameron Poolman, CEO of Grays (Australia) Holdings.
But after becoming aware of the topics to be discussed there was a sudden change of mind. On calling Kehoe again, he advised that he was fully aware of Section 52 of the Trade Practices Act but would not make any further comment. Kehoe was emailed the following questions:
1. Your website lists “1.21ct 18ct W/G Diamond Engagement Ring – Val $10,595.” What is intended by the term “Val $10,595”?
2. If it is intended to mean “valuation certificate” why does it not state that?
3. Do you think that a consumer using GraysOnline would associate the term, “Val $10,595” as the price that the product had previously be sold? If not, why not?
4. The product is purported to be offered for sale by Jacobs Handcrafted Designs, BUT why do the valuation certificates list GraysOnline if GraysOnline is not the seller of the product?
5. GraysOnline uses the term “CRP $1,200”. Consumers are familiar with the term “RRP”, but what does “CRP” mean and why is it not explained?
6. The most intriguing thing about your website is that it lists literally thousands of items under a number of categories, BUT why is it that only jewellery items listed use Valuations? In other words, why is that, for example, computers, home appliances or cars are not listed with valuation certificates?
Easy advised that he has had to deal with a number of complaints from the trade and consumers about GraysOnline in relation to the valuations of jewellery items. Asked if the number of complaints about GraysOnline was inordinate when compared to other businesses that the NCJV has received complaints about, Easy replied, “Yes”.
Easy went on to explain that in 2003 a document was sent to all NCJV members advising of the legal position relative to valuations supporting marketing.
“From 2003 onwards NCJV education has been heavily slanted towards these very subjects. Indeed, we conducted a national touring seminar with a solicitor lecturing, in late 2005, quoting the August 2005 ACCC Guidelines, especially Page13 regarding the use of valuations in marketing. The NCJV recommends to its members that a “Quality Assessment Report” is a safer option, where the valuer describes the technical merit of the items, but does not include a value judgment. Any valuer proven to be issuing misleading valuations would be asked to leave the NCJV,” Easy said.
At the time of publication GraysOnline had not taken the opportunity to offer any comment or reply to the questions raised by Jeweller and the JAA was preparing its complaint to the ACCC.