Advertising / Consumer Protection

Clearer and fairer price advertising on the way

The new clarity in pricing requirements for business commence on 25 May.  These requirements deal with how business may use ‘component pricing’ (specifying the price for each part of a good or service separately) when advertising their products

The new requirements are contained in section 53C of the Trade Practices Act and require that where a corporation makes a price representation that is less than the total price required to be paid for the good or service involved (a component price) then the corporation must also specify – in a prominent way and as a single figure, the single price for the goods or services.  To be sufficiently prominent it must be ‘at least as prominent as the most prominent’ of the partial price representations.  This would exclude, for example, mobile phone companies prominently displaying a low purchase price with an asterisk pointing to small print detailing the full miminum price to be paid.  It will also prevent car companies specifying a price ‘plus on-road costs’.  Thus, although component prices are not prohibited, the full price will now also be required to be prominently displayed.

The provision also requires a corporation to specify the minimum amount required to be paid for sending goods to the customer, where this price is known at the time of the price representation (but this may be listed as a separate figure – it does not have to be included in the single specified price).

These requirements apply to corporations acting in trade or commerce; they do not apply to private sales.

On Wednesday the ACCC released information guides to assist business and consumers to understand the new requirements.  They include the News for business – component price advertising, which provides a general guide for all business, as well as industry-specific guides:.  News for busines: component pricing – electrical goods, whitegoods and furniture advertising, Price advertising and the travel industry and Pricing manual for the motor vehicle industry.  A separate guide is available for consumers.

This new legislation – like unit pricing (not yet mandatory in Australia, but moving in that direction) – it to be welcomed.  It should enable consumers to more accurately compare the price of products or services they are purchasing and will – at least to some degree – level the playing field for business.

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2 thoughts on “Clearer and fairer price advertising on the way

  1. Pingback: Component pricing laws having an impact « Contract and Consumer Law

  2. Thank you for this. I was wondering why most of the prices had disappeared from the motorcycle manufacturer web sites I was looking at.
    Your blog post explained it nice and clearly. Thank you.

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