Once upon a time I found myself owning a retail store selling gas appliances.
Awful business, retail. I ended up handing the mess over to a liquidator rather than grinding on and now the premises is a Magness Benrow outlet, a firm whose grating radio advertisements have caused me to develop a deep and undeserved antipathy towards it.
I digress.
Let me explain the "interest free" trick.
If a customer wanted finance I would arrange this with one of the various consumer finance houses.
A simple deal would be a $1,000 sale at 8 per cent interest.
The finance company would pay me the $1,000 and charge interest to the client.
However, if I wanted to entice the customer with an "interest-free" offer over 12 months the finance company could only recoup $1,000 from the customer, so they would discount the deal to me, paying only $900. Their profit would lie in the margin.
This became tricky if a customer didn't want to finance the purchase, because the Fair Trading Act means if I made an interest-free offer I could not, legally, offer a cash price that was lower than the interest-free deal.
Thus, if a customer wanted a discount for cash, and we agreed to a price, the customer could then demand that they get this price interest free.
There was no shortage of clever-clogs who tried to pull this stunt and you could usually spot them in advance.
But on occasion one would get past me, haggling a cash price and then telling me that I needed to give them this price on an interest-free deal. Often men would do this, I think, to impress their wives or girlfriends.
They were always smug, thinking they'd outwitted a Jedi rather than just trying to scam a poor schmuck struggling to sell enough central-heating units to pay the rent.
At this point I'd take great pleasure in tossing them out of the store, but this highlights the problem facing larger and reputable retail firms who cannot take such a cavalier attitude to customer relations.
If a retail store is offering interest-free deals, understand that during the promotion you will not be able to haggle them for a cash discount because you, the customer, who is always right, can try to trick the store by then demanding the lower price on interest-free terms.
Instead, if you want to pay cash come back the following week when the promotion is over.
You will notice that the large reputable store will employ the same shameless deception that I ran; the sticker price on what you want to buy will be immediately discounted, often without any bargaining needed on your part.
The point is that the store has a nominal price that they can then use to discount when they offer interest-free promotions.
Westpac's conduct affected a total of 24,621 customers.