New guidance on ending misleading and confusing pricing tactics
Monday, 12th December 2016
As a consumer have you ever felt completely confused by retailers' pricing tactics and felt like you have not received a fair deal? As a trader have you needed more up-to-date, user-friendly advice on your responsibilities relating to pricing practices in the current marketplace?
On the 7 December new guidance was published aimed at stopping some retailers from using misleading and confusing pricing tactics.
Guidance for Traders on Pricing Practices, by the Chartered Trading Standards Institute ("CTSI"), replaces the former Department for Business Innovation and Skills’ ("BIS") Pricing Practices Guide 2010 (now the Department of Business, Energy and Industrial Strategy, "BEIS").
The publication of the latest guidance follows a Which? Investigation after there had been a number of complaints from disgruntled shoppers and subsequent super-complaints on misleading pricing practices in the grocery sector.
Which? had claimed that retailers were misleading and confusing consumers into sales by creating a façade of savings that did not actually exist.
The Competition and Markets Authority did not find that the practices were widespread but recommended a series of measures to give shoppers greater clarity and confidence that they are getting a fair deal.
The new guidance is not legally mandatory, but provides traders with useful advice on consumer protection legislation relating to pricing and associated practices in the UK. UK law also applies to websites located outside the UK where they are offering products or services for sale to UK consumers.
In the recent CTSI press release, they state that the legislation has not changed and retailers must continue to comply with it, however, enforcers are likely to give retailers until April 2017 to adjust to the new guidance. Courts may refer to the guidance when determining whether traders have breached the law in any way in relation to pricing practices.
The updated guidance is designed to be more 'user-friendly' taking the complexity out of regulation to hopefully increase understanding. Some important changes in the guidance include:
- Guidance on not applying credit or debit card fees to consumer orders or purchases which exceed a traders own cost for providing that method of payment;
- A prohibition on the use of default options such as a pre-ticked box on a website in order to secure consumer consent to additional fees or charges;
- The requirement for substantiation when referring to the much debated ‘recommended retail price’, which will be important to ensure that any price saving advertised reflects a genuine saving;
- New advice in relation to volume offers such as ‘multi-buy’ promotions, combination offers and ‘extra for the same price’ deals;
- Guidelines for subscription services tying consumers into repeat payments; and
- Updated guidance in relation to ‘Up to X% off’ and ‘From…’ claims. These pricing claims may only be used if the maximum reduction quoted applies to a significant proportion of the range of products included in the promotion.
Adrian Simpson, CTSI’s business education and consumer codes expert, said: “Consumers lead busy lives and are subjected to an increasingly wide range of products, product options and sophisticated marketing. But clear, honest and upfront pricing is beneficial to both consumers and businesses.
“Retailers must ensure the information they present to consumers is fair and does not waste time or cause annoyance, disappointment or regret. Neither should it cause a consumer to overspend or buy a product that is inappropriate for them.
“In light of the new guidance we are urging businesses to review their pricing practices and reassess their fairness.”
The Department for Business, Energy and Industry Strategy is considering the recommendations made by the CMA, particularly on unit pricing, which it is hoped could become a useful tool allowing shoppers to compare prices more easily.
Margot James, consumer minister, said: “Consumers are looking for best value but it can sometimes be difficult to work out whether special offers and promotional deals represent true value for money.
“This new guide will help traders give clear pricing information to their customers, who should be at the heart of every business. I’d like to thank the Chartered Trading Standards Institute for carrying out this important work.”
The guidance will supersede previous advice and you can download the latest guidance here.
For further information contact Rob Belton from our Business Regulatory Consultancy on email@example.com or 0207 544 2435.