Pricing is a valuable tool when it comes to selling your goods or services. It can have a huge impact on the success of your business. But pricing is not only a commercial consideration, but a legal one. The Australian Consumer Law (ACL) sets out certain rules that your business must follow when displaying pricing. In this article, we break down the key legal considerations.
1. The Single Price Rule
When advertising your goods or services, you must display a single price that refers to the minimum total cost of the product. This single price should include:
- the price for all aspects of the final product for the good or service; and
- any taxes, duties or extra fees for the item you are selling.
However, the pricing does not need to include:
- the delivery price (although you should display this separately in the advertisement); or
- optional or extra charges.
If you do become aware that you are displaying more than one price, you must remove the other price. You should then sell the product or service for the lower price.
The Single Price Rule for Menus
At LegalVision, we are regularly asked what the legal requirement is when displaying pricing during public holidays. If you operate a restaurant, café or bistro and you charge a surcharge on certain dates (i.e. public holidays), you do not have to provide a separate menu, price list or price column including the surcharge.
However, you must state on the menu or price list that: “a surcharge of [percentage] applies on [the specified day or days]”. You must display these words as prominently as the most prominent price on the menu.
2. Exceptions to the Single Price Rule
Some exceptions to the single price rule include when:
- the advertising states that prices vary in different regions;
- you show a unit price;
- a price is completely hidden by another price; or
- a price is displayed in an overseas currency.
Additionally, supermarkets and online grocery retailers must display the unit price of groceries with the unit of measurement, alongside the selling price.
3. Misleading and Deceptive Pricing
As a general rule, displaying pricing should be genuine and consumers must be able to easily see the price of the item in your advertising. Importantly, the following practices constitute misleading and deceptive advertising, including displaying:
- a “before”, “was” or “strike through price” which was not the sale price for the items within a reasonable period immediately before the sale commenced;
- a “before”, “was” or “strike through price” where only a limited portion of sales were for the higher price within a reasonable period immediately before the sale commenced;
- a price comparison with a competitor’s price for an identical item, but the price for your item is from a different market or geographical location;
- “savings” or “discount” statements comparing to the recommended retail price (RRP) where the goods were not sold at the RRP or the RRP reflects the current market price;
- a “sale” price which is not a temporary price, therefore creating a false sense of urgency to make a purchase; and
- an advertising price that is not the total price payable for the item.
Key Takeaways
When displaying pricing, it is prudent to understand your obligations in order to avoid engaging in misleading and deceptive advertising. If you do not do this, you expose your business to legal ramifications including fines and reputational damage.
If you have questions about your obligations under the ACL, get in touch with LegalVision’s advertising compliance lawyers on 1300 544 755 or fill in the form below.
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