New Consumer Protection from Unfair Trading Regulations scrapped previous price indication laws and necessitated an update to a related pricing code. In the old code’s place has appeared “Guidance” from the BERR. Are there any major changes? Omar Bucchioni reports.
Who: Department for Business, Enterprise and Regulatory Reform (BERR)
When: June 2008
Law stated as at: 27 June 2008
In May 2008 the Department for Business, Enterprise and Regulatory Reform (BERR) published Guidance for traders on good practice in giving information about prices (“Guidance”). The Guidance is at http://www.berr.gov.uk/files/file46254.pdf.
The Guidance is divided into four parts:
(a) Price comparisons
(b) Actual price to the consumer
(c) Price indications which become misleading after they have been given
(d) Sale of homes
The legal framework is set out by the Consumer Protection from Unfair Trading Regulations 2008 (“CPRs”) which implement the Unfair Commercial Practices Directive 2005/29/EC (“UCPD”).
The CPRs repeal the price indications provisions of the Consumer Protection Act 1987 (“CPA”) and the Guidance replaces the old, CPA-based “Code of Practice for Traders on Price Indications.” There are few substantive differences between the old and new codes.
Best practice re: Price Comparison
The Guidance states that comparisons should be fair and reasonable. You should compare like with like or with very similar products in terms of quality, composition and description. Comparisons should generally be made with prices of outlets in the same locality unless it can be shown that it makes no difference because of a national pricing policy. In addition, (this list is not exhaustive):
- If you choose to make price comparisons, you should therefore be able to justify them, and to show that any claims you make are accurate and valid – in particular, that any price advantage claimed is real.
- You should compare like with like. This implies that the products compared should be the same, or very similar; and should have been on offer in the same outlet. Also, the basis of the price comparison should be reasonable in terms of time. Ultimately, what is reasonable will depend on the circumstances.
- If the basis of your comparison differs on any point from the practice recommended, you should explain in a way which is (i) clear; (ii) easily accessible to the consumer; (iii) easily identifiable; (iv) easily legible by the consumer and (v) it should set out positively what comparison is being made, rather than vague negative disclaimers.
- You should make the meaning of any price comparison clear to the consumer. You should not leave consumers to guess whether or not a price comparison is being made. If you make statements like “sale price £5″ or “reduced to £39″ you should quote the previous higher price to which you refer.
- You should make clear what sort of price the higher price is. Comparisons described by words like “regular price”, “usual price” or “normal price”, which do not say whose regular, usual or normal price it is, should not be used.
- A comparison with your own previous price should in general be with your immediately previous price for the product. If the comparison is with an earlier price, you should make the basis of the comparison explicit (Please note: If you have offered the product at a lower price for any significant period in the interval (lower, that is, than the price at which you now intend to sell it), this should be stated. What might constitute a significant period will depend on all the circumstances, but a single period not exceeding a week in a six-month interval, or two or three periods of a weekend each in a six month interval, would be unlikely to be significant).
- A previous price used as a reference price to make a price comparison should be a genuine retail price.
It is forbidden under the CPRs to describe a product as “free”, “without charge” or similar, when the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for the delivery of the item.
The Guidance amplifies this by stating that in any event, an offer is not “free” if:
(a) there are additional charges that you would not normally make;
(b) the price of any product the consumer must buy is inflated or there are any incidental charges (for example, postage or premium rate telephone charges) which the consumer must pay to get the “free” or “reduced price” product; or
(c) the retailer will reduce the price to consumers who do not take it up.
Most importantly: where an offer is a package deal, any element of it should not be described as “free” if the rest of the package is not in practice available for the same.
The Guidance makes it clear that a retailer should not call a promotion an ‘introductory offer’ if they do not intend to offer the same product for sale at a higher price at the same outlet after the offer period is over.
A “reasonable” period depends on the circumstances but it is very important to remember that the CPRs ban providing false information about limited availability and best practice should therefore be to make it clear to the consumer when the offer is extended.
Why this matters:
Over the last few months this area of the law has gone through several changes and operators may well find themselves getting into unexpected troubles if they do not keep pace with the changes.
The BERR’s Guidance reminds us all that it has no mandatory force: there is no express legal obligation for traders to follow the practices recommended. However, traders must be aware that the Guidance takes into account relevant provisions of the CPRs and failure to observe the Guidance will not be a good place to start from in defending any enforcement action instigated by the Office of Fair Trading or Trading Standards under the powers given them by the CPRs.
The Guidance does not differ in many material respects from the old Code of Practice for Traders on Price Indications which it replaces, but it is nonetheless still a useful and practical guide which all UK advertisers quoting prices in ads would do well to follow.