When trading standards were thrown out on a prosecution over “If you find it cheaper elsewhere we’ll refund the difference” claims, it seemed like retailers could do their worst and escape the courts. Then another judgement followed quickly and put the onus back on retailers to mind their Ps and Qs with promotions of this kind.
Who: The Link Stores and Dixons
When: December 2000 and February 2001
It has been "one step back and two steps forward" for trading standards officers in recent prosecutions of retailers over price promises. Section 20(1) of the Consumer Protection Act 1987 ("CPA") makes it a criminal offence to give a price indication which is misleading at the time the indication is made. Section 20(2) makes it an offence where a price indication becomes misleading at some point after it was made.
The Link stores were prosecuted under s 20(2) over "We won’t be beaten on price. If you find exactly the same package cheaper in a local store within seven days we will refund the difference." A consumer who had already bought a mobile phone from The Link was refused a refund after finding the same phone in another local store for £20 less. Trading standards argued that the price promise became misleading when the phone buyer was refused the refund, so prosecuted under s20(2). The Court said 20(2) was the wrong subsection on which to prosecute. The statement had to have become misleading after it was initially made by The Link, but before they sold the phone in question. As the indication became misleading after the phone in question had been bought i.e. when the customer came back to claim his refund, the subsection didn’t apply.
Shortly afterwards the court heard a prosecution of Dixons on similar facts, but this time under section 20(1). If this failed, retailers would apparently be immune from CPA action if, for whatever reason, they failed to deliver on price promises of this kind. Trading standards won out, however, and Dixons were convicted. The particular angle in this case being that the refund was refused on grounds allowed by the terms of the price promise offer, but the offer terms were not properly brought to the attention of the customer in ads before the purchase was made. Hence the price indicators given in these ads offended against s20(1).
Why this matters:
Hitch-free and compliant administration of price promises is a considerable challenge for large retail chains. As it should now be assumed that trading standards will prosecute on the right section of the CPA and that fancy legal footwork at trial will not necessarily get the defendant off the hook, the greatest care is needed, at all levels, from TV advertising down to the potentially crucial colloquy between customer and shop assistant when the refund is claimed.