New guidance on pricing practices published by the Chartered Trading Standards Institute

New guidance on pricing practices published by the Chartered Trading Standards Institute

Guidance designed to assist businesses understand how to avoid carrying out unfair or confusing pricing practices has been issued by the Chartered Trading Standards Institute (CTSI) available here.

The guidance covers a range of pricing practices including advertising discounts such as ‘was/now’ prices, additional charges, using the terms ‘RRP’ and ‘free’, comparisons to a competitor’s price and volume offers like multi-buys.

The guidance replaces the former Department for Business, Innovation and Skills’ (BIS) Pricing Practices Guide which has been withdrawn.

The guidance takes a similar approach to the BIS guidance on some points but there are also notable departures from it. The central theme to the changes is a push to ensure businesses comply with the spirit of the rules, not just the letter of them.

Whilst the legislation underlying the guidance has not changed, businesses are being advised by the CTSI to review their pricing practices and reassess their fairness. The CTSI has advised that enforcers are likely to allow businesses until April 2017 to modify their practices in line with the new guidance.

Key changes in the CTSI guidance in the area of advertising discounts include:

  • General notices saying, for example, “up to 50% off” require a significant proportion of the promotional items to be available at the advertised discount.
  • Where comparisons are made against a higher price at which a business previously sold a product, there is no specific amount of time for which the product must have been sold at the higher price. However, as under the BIS guidance, the lower price should not be offered for longer than the period the higher price was offered.
  • No absolute time limit is given in the CTSI guidance for when comparisons can be made against the previous price of a product but a comparison against a product last sold less than two months ago is more likely to comply than against a product last sold many months ago.

Businesses may find the shift from the BIS guidance to the CTSI guidance leaving them with a lack of clarity due to the removal of some guidelines on timescales in the CTSI guidance. A prudent approach would be for businesses to ask themselves whether the average consumer would think that what they were doing is fair if the consumer knew all of the facts.

There are also numerous examples in the user-friendly CTSI guidance showing examples of pricing practices which are ‘more likely’ and ‘less likely’ to comply with the law that may assist businesses in understanding what pricing practices are likely to be acceptable.

A more clear-cut area is that of additional charges. The guidance contains important revised guidelines that businesses will wish to get to grips with. Key points to take away include:

  • Do include all compulsory fees and charges in the price
  • Don’t charge consumers a fee for using a credit card or debit card that exceeds your own cost for providing that method of payment
  • Don’t use a default option (such as pre-ticked box on a website) in order to obtain a consumer’s consent to an additional fee or charge

If you would like advice in this area or have any queries, please do not hesitate to contact our commercial team.

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