I run an online store, what are my obligations regarding drip pricing?

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• What is drip pricing?
• What are my legal obligations?
• Anti-competitive behaviour
• Conclusion

The Australian Consumer and Competition Commission has adopted a strict stance on drip pricing that all business owners should be aware of. As seen in recent media releases, the ACCC has launched legal action against a range of high profile companies that have been allegedly using drip pricing when selling their products and services to customers online.

What is drip pricing?

Drip pricing occurs when a particular price is advertised to customers at the beginning of the sale. As the customer proceeds through the purchasing process, additional fees are added to this original price that are unavoidable. These additional fees, on top of the original quoted price, result in the customer paying a higher price than originally advertised.

However, the ACCC notes that business may apply additional fees and charges when selling products and services to customers without this qualifying as drip pricing. For this reason, you should speak with a tech solicitor in order to make sure that the payment methods that your customers have to go through when purchasing from your online business are not considered to be drip pricing according to the ACCC.

What are my legal obligations?

Business owners operating an online store should ensure that any additional fees and charges, that may be incurred by a customer purchasing from the website, are clearly identified at the beginning of the online purchasing process.

If you disclose this information to customers as early as possible, you will minimise the risk of your payment process involving drip pricing of any kind. Customers will also develop a relationship with your business, and your brand name will develop a positive reputation due to your business’s forthcoming customer service policies and procedures.

Anti-competitive behaviour

The ACCC has also indicated that engaging in drip pricing is considered anti-competitive behaviour. This is because, other business will find it difficult to provide competitive prices for their products or services compared to yours, if they are unable to determine exactly how much customers are paying for your products and services.

Engaging in anti-competitive behaviour can have serious legal ramifications for your business and your general business reputation. As such, it is useful to get an understanding of your legal obligations when operating an online business to steer clear of conduct that the ACCC considers unlawful or illegal.

Conclusion

To ensure that your online business is operating as per the ACCC’s guidelines and Australian legislation, it is a good idea to speak with a tech solicitor as early as possible. A tech solicitor will be able to give you a thorough understanding of your legal obligations, what options are available to you in setting out payment terms and mechanisms to your customers, and how to avoid engaging in anti-competitive behaviour.