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Misleading pricing

What you can do about misleading prices and pricing inconsistencies.

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Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

We get asked a lot of questions about the rights of consumers when it comes to the pricing of goods and services. 

For example, what happens when a retailer shows different prices for the same goods? What can people do about hidden fees?

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Multiple prices

If a business displays more than one price for the same item, this is called multiple pricing. The business must sell the item for the lowest "displayed price" or withdraw the item for sale until the price discrepancy is fixed.

The displayed price is a price shown:

  • on the item
  • on anything connected with or used with the item
  • on anything used to display the item
  • in a current catalogue
  • that reasonably appears to apply to the goods, or
  • on a register or a price scanner.

However, a displayed price does not include:

  • a price that is completely covered by another price
  • a per unit price which is a different way of expressing the price (eg. in a supermarket where a price is shown as $x per 100g to help compare the product to other similar products)
  • a price that is not in Australian currency.

If a business sends out a catalogue which shows the wrong price, this can be fixed by publishing a retraction in a publication which has a similar circulation to the original catalogue. 

For example, if a catalogue which shows the wrong price is inserted into a major daily newspaper, the retraction should appear as a correction in that newspaper, or in another catalogue inserted into that newspaper within a short time after the original catalogue appeared.

Supermarket code of conduct

Some (but not all) supermarkets are signatories to the code of practice for computerised checkout systems in supermarkets. The supermarkets which participate in the code display signs telling customers that they are participants. 

The code says that when an item is scanned at a higher price than it says on the shelf or as advertised, a customer is entitled to receive the first item free and all later items at the lower price.

There are some exceptions:

  • Liquor products
  • Tobacco products
  • Items without a barcode or PLU number
  • Items with a shelf price of $50 or more

Despite what some supermarkets might tell you, it is not necessary for the customer to have paid for the goods or to have left the store to be entitled to receive the first item free of charge. 

Customers can complain to a supervisor or the store manager if staff refuse to comply with the code. If the store does not comply with the code, a customer can take their complaint to the Australian National Retailers Association (ANRA) on 1800 738245.

Bait advertising

Sometimes, catalogues will say that a price is only available in a certain region, or a certain store, or for a certain period of time. That's quite OK. 

Catalogues will sometimes say that not all goods are available in all stores. That's OK too. 

But it is not reasonable to advertise an item at a ridiculously low price and only have one or two available (unless this is made clear in the advertisement). 

This is called bait advertising because it uses a low price to get customers into the store. Businesses should have reasonable stocks of items that are advertised. If they are only available for a limited time, this should be made clear. 

The definition of what is a "reasonable period" or "reasonable quantities" will vary from one situation to another, depending on the type of the goods or service. 

So if it's a discounted dishwasher you might expect only a few to be available, but if it's discounted perfume, you would expect there to be more than a couple of bottles available - unless this is specifically mentioned in the advertisement.

Sometimes businesses might offer a "raincheck" on the advertised price to keep goodwill with their customers. Or they might offer a similar product at the same price. 

This is OK as long as they are not using the sale price as bait to upsell customers to something more expensive.

Single pricing

When businesses are advertising or promoting their goods or services, they must display a single price which is the minimum total cost of buying the goods, including GST and any other extra fees and charges. No hidden fees. 

The single price should be clear and unambiguous and should include all the parts of the price that have to be paid to get the goods. But it doesn't have to include delivery charges or optional extras. If there is a minimum delivery charge, this should also be displayed in the advertisement.

The single price should be at least as prominent as any other price that is advertised, so that you can work out which price is the total price from looking at the ad.

Restaurants and cafes that add on a surcharge for Sundays and/or public holidays do not need to have a whole separate menu with the different prices. It is sufficient if the menu includes the words "A surcharge of [x percent] applies on [the relevant days]" and these words must be at least as prominent as the rest of the prices on the menu.

Misleading prices

Businesses must be careful not to mislead consumers when advertising prices for goods or services. Here are some common examples of marketing gone wrong:

  • Showing a false "before" price next to a sale price. The "before" price must have been the price the goods were sold for in a reasonable period prior to the sale.
  • The "before" price must also have applied to a reasonable number of sales before the sale started.
  • Comparing the sale price to a false cost or wholesale price. 
  • Comparing the price against a competitor's prices in a misleading way, such as leaving out important information or referring to slightly different products.
  • Showing a price that only applies to certain customers, without making it clear on the ticket that there are conditions attached to that price. The main price should still be shown in a way that is easy to see.

Drip pricing

Drip pricing is a relatively new phenomenon which involves the incremental disclosure of fees and charges over the course of an online booking process. It is misleading to consumers and it can be detrimental to competition.

Consumers see a price advertised as they commence the booking process. They may have been attracted to the website by the advertised price, or they may see the price and use it to make comparisons against other companies. 

But once they start going through the process, fees and charges are added along the way, perhaps not in big chunks, but in smaller "drips" until the price at the end is quite a lot more than the price at the beginning. 

But by the end of the process, even though they are annoyed at the extra charges, the consumer has invested time and effort and may be less inclined to start the process over again. 

So the consumer is misled and competitors who disclose all their prices upfront are disadvantaged. The ACCC has drip pricing in its sights in 2014 and has promised action. 

Airlines, hotels and ticketed events are common culprits.

Receipts and itemised bills 

Businesses must always provide a receipt or proof of purchase for anything over $75. If one is not provided, consumers have the right to ask for one. 

Consumers can also request a receipt for anything under $75 and businesses must provide the receipt within seven days of being asked.

A receipt or a proof of purchase must include:

  • supplier's name and ABN or ACN
  • date of supply
  • what product or service was supplied
  • the price.

Examples of a receipt or proof of purchase are:

  • GST tax invoice
  • cash or credit card receipt
  • handwritten receipt
  • lay-by agreement, or
  • a confirmation for an internet transaction.

Consumers can ask suppliers for an itemised bill up to 30 days after receiving a service or 30 days after receiving a bill for the service. This must show:

  • how the price was calculated
  • the number of hours of labour and the hourly rate (if relevant), and
  • a list of the materials used and the amount charged for them (if relevant).

Suppliers have to provide the itemised bill within seven days of the request and it must be provided free of charge and be legible and understandable.

What can I do about misleading pricing?

If you have a price-related complaint against a business you can do the following:

  • First, contact the business itself and explain the problem. You will find that in many cases you can find a solution quickly. You may need to speak with a manager or the business owner. Make a note of your conversation and if necessary follow up with an email or letter.
  • Consider commenting on the Facebook page of the business. Keep it polite. Sometimes the social media side of a business can be monitored more closely than emails and phone calls. 
  • If you are not able to resolve the problem with the business, contact your state or territory fair trading or consumer protection agency or the ACCC and lodge a complaint. 

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