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Top Tips To Avoid Misleading Pricing Practices

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Top Tips To Avoid Misleading Pricing Practices

Top Tips To Avoid Misleading Pricing Practices

As lockdown restrictions ease, people are eager to shop, go to pubs, restaurants, host gatherings and get that much needed haircut.

In response, shops and restaurants offer sales and special offers to attract customers. But at what point does a sale/special offer stop being tempting and start being misleading?

Approximately 70% of the complaints to the Advertising Standards Authority (the “ASA”) relate to misleading advertising.[1]

OVERVIEW OF THE LAW

All traders must comply with rules and guidelines required by the Consumer Protection from Unfair Trading Regulations 2008 (the “Regulations”) when they sell any goods or services to consumers.

The Regulations:

  • prohibit pricing practices that are false or misleading (a pricing practice may be unfair it if it likely to deceive consumers, even if the information contained is factually correct) that causes, or is it likely to cause, the average consumer (i.e. reasonably well informed, reasonably observant and circumspect consumer) (and vulnerable consumers*) to complete a purchase that they would not have otherwise made;
  • apply to all platforms (e.g. advertising a sale/special offer in a shop window, on a billboard, on social media or on a delivery food app);
  • cover all forms of representation made about the price, price promotion, the manner in which the price is calculated and the existence of a specific price advantage; and
  • require traders to act professionally when pricing (including offer sales/special offers). All traders are expected to exercise pricing practices in accordance with honest market practice and the general principles of good faith in their field of business.

In most cases, breaching the Regulations is a criminal offence that can lead to a fine or up to two years imprisonment or both. The Regulations also give consumers the right to redress, including the right to undo a contract and receive a refund, the right to a discount and an entitlement to seek damages.

TOP PRICING PRACTICES TIPS: RIGHT – CLEAR - ACCURATE

Make sure your pricing & offers are RIGHT

This can be achieved by ensuring…

  • Qualifications are clear and that pricing relates to the advertisements. Don’t lure consumers with attractive advertising around special offers (using statements such as ‘all’ or ‘everything’) when you know you cannot offer that product, or only have a few in stock at that price.
  • Pricing includes all non-optional charges (such as VAT, show booking fees, administration fees that must be paid for a service and a set cover charge at a restaurant) and delivery charges.

This can be achieved by avoiding…

  • Advertising products as 'on offer' for longer than they were sold at their full price, or where prices increased immediately prior to the start of an offer.
  • Volume offers such as multi-buy (e.g. “buy one get one free”), combination offers (e.g. “meal deals“) and extra for the same price (e.g. “50% extra free”) unless the consumer is genuinely getting better value because of the offer.
  • The term ‘free’ (e.g. “free sample”), or similar phrases, unless the consumer pays nothing other than the unavoidable cost of responding to the advert and collecting or paying for delivery of the item.
  • Advertising products or services at an attractive price if you know they will not be available in reasonable quantities at that price for a reasonable period without making this clear in the promotion.

Make sure your advertisement is CLEAR

This can be achieved by ensuring…

  • The presentation of your offer and any additional text in comparison to the headline text or main message is transparent and clear.
  • Content is truthful, clear and consistent with other information you provide. It should not need explanatory text to make it comply.
  • Additional information should not contradict the headline claim and be clear, legible and prominent enough to capture a consumer’s attention in a given media or ad format.

This can be achieved by avoiding…

  • Delay in notifying consumers about additional charges or other material information when it is possible to do so from the outset.
  • Leaving out material information such as qualifying statements (e.g. “Wednesdays from 6 pm), important conditions of the offer (e.g. “minimum two dinners) and relevant exclusions (e.g. “set menu only”).

Make sure your price comparison/ reference is ACCURATE

This can be achieved by ensuring…

  • The recommended retail price (RRP) represents a genuine selling price and does not differ significantly from the price at which a product is generally sold.
  • Comparison to a competitor’s price not be false or mislead consumers and be objective rather than subjective.
  • When comparing with prices in different circumstances that the features that differentiate the circumstances are clear and not hidden in the small print.

This can be achieved by avoiding…

  • After-promotion pricing if the price is not subsequently increased to the advertised after-promotion price at the end of the promotional period.
  • Comparing the price of your product against the price of a product with a designation of origin unless your product has the same designation of origin.
  • Comparison with prices in different circumstances unless any material differences in the circumstances are communicated to consumers in a way that is transparent, fair and prominent.

The ASA recommends that for each pricing promotion, you should ask yourself the following three questions:

  1. Is any information (however it is given) false?

  2. Even if the information is factually correct, will it, or the way in which it is presented, deceive or be likely to deceive?

  3. Is information that a consumer needs to know omitted, hidden, or given in a manner that is unclear, unintelligible, ambiguous or untimely?

If any of your answers are ‘Yes’, or if you have any doubts, you should change your pricing promotion.

* Customers with mental or physical infirmity, including sensory impairment, limited mobility and other disabilities. 

Get in touch

For more information on this update, or any Food and Drink matters please contact Daisy Divoka.

This article was prepared by Salvatore Anania