It is a criminal offence for traders to deliberately make misleading price claims about their goods or services and against the letter of the law to make prices confusing to the consumer.
For example, 'was £120, now £99.99' is deceiving if the goods or services have never been presented at the higher price. It is also misleading/confusing if a trader fails to show 'hidden extras', or to make it clear when a price is conditional on, say, another purchase.
The Competition Markets Authority have stated that some unit prices and particularly promotions have the worrying potential to mislead customers - and could even be a breach of consumer law. This came after a complaint from consumer group Which? who raised concerns ‘about confusing and misleading promotions and a lack of easily comparable prices’.
Some retailers are guilty of increasing the price of products prior to the start of a volume promotion and promotions such as ‘was/now’ offers, where a product is on sale at a discounted price for longer than the higher price was applied, is considered to be deliberately misleading consumers.
Supermarkets (the main culprits) could now face legal proceedings for confusing customers with non-transparent multi-buys, "deceptive" shrinking products and baffling discounts, the CMA has announced. Supermarkets are now under surveillance to revise their current pricing practices or face being taken to court, with all the ensuing adverse publicity that will involve.
The CMA has called for new guidelines to be issued to supermarkets and has published its own ‘at a glance’ guide to help consumers. However, the complaints still keep coming into the Retail Ombudsman – and the current rules are only guidelines, not hard and fast legal obligations.
So, consumers are still likely to get angry about any attempt to pull the wool over their eyes.
Currently, around 40% of grocery spending is on items on promotion - and (good news) the vast majority of these are above board, says the CMA. However, there is definitely a lack of regulation in this area and the CMA states that consumers should never be misled or confused about how much (or how little) they are getting for their money.
It stated that ‘unit pricing’ allowing comparisons between products needed to be made more clear-cut. As an example, some similar products in supermarkets were priced per 100ml and others per 100g, making it impossible to make a price comparison. Is this artful deception on behalf of the supermarkets? Surely they should make it less complicated for the shopper to compare like for like?
Generally, retailers do take compliance seriously but the CMA has called for supermarkets to end the practice of running “was/now” promotions, where the discounted price is advertised as a promotion for longer than the higher price, was employed.
The CMA also wants the Government to introduce new standards about “unit prices”, which indicate to shoppers what the price of a single item is in a multi-pack so they can compare prices more easily and decide whether it really is cheaper to buy the multi-pack.
According to new research from Which? almost 3/4 of consumers believe supermarkets are trying to confuse them by using misleading pricing practices – and shoppers are very unhappy about the following:
- Poorly labelled products
- Prices small and hard to read
- Inconsistent pricing.
Which? has called for a change in the law requiring retailers to clearly display the price of items per unit, so that shoppers can easily compare the value of similar products. The unit price is the price by weight or volume that allows shoppers to compare the true cost of products, even if they come in different sized packaging.
As an example, if a 500ml jar of mayonnaise costs £1.05 and a 750ml jar is £1.47, a clear unit price would show you straight away which jar gives you the most mayonnaise for your money. In this case, the 500ml jar is 21p per 100ml and the 750ml jar is 19.6p per 100 ml. The current confusion caused by inconsistent pricing means shoppers don't always get the best deal
Most shoppers usually assume that items sold loose would be cheaper but this is not necessarily the case - for
It is also confusing for shoppers when the prices for different brands of comparable products are measured differently – one price may be displayed in ml and the other in grams. The regulators have called for consistency in weights and measures for comparable products.
Which? executive director Richard Lloyd has said:
"With household budgets squeezed and rising food costs among the top worries for consumers, it's all the more important that stores make it as easy as possible for people to spot the best value products. All food and drink should be clearly and consistently priced by weight or volume across all stores, including products which are on special offer."
Morrisons has subsequently announced a promise to make unit prices consistent among similar products and to make the print on shelf labels larger and more visible.
Sainsbury's has also announced that it will be trialling a new label format, which will include clearer unit pricing, to assist customers to identify the best deals.
When selling to the general public, all pricing information must be clearly legible, unambiguous, easily identifiable, in sterling, and inclusive of VAT and any additional taxes.
Pricing information must be shown close to the product, or in the case of, for example, online or mail order sales and advertisements, close to a picture or written description of the product.
Prices can be shown:
- On goods themselves
- On a ticket or notice adjacent to the goods
- Grouped together with other prices on a list or in a catalogue in close proximity to the goods. If counter catalogues are used there should be enough copies for customers to refer to
Pricing information should be clearly available to consumers without them having to ask for assistance in order to see it.
Legibility refers to a consumer with normal sight. Traders must also comply with the Equality Act 2010 and take account of the special needs of the elderly and disabled groups.
Promotional offers should be unit-priced to reflect the single standard product.
Retailers may give additional information if they wish (for example, the 'reduced unit price if purchasing a multi-buy' offer may be shown) as long as it is clear to which products it relates.
Limited period promotions (such as 10% extra free) that relate to individual products may retain the unit price of the standard product for the period of the offer. Retailers may give additional information if they wish - for example, they may show the unit prices of both the standard and promotional products but they must be crystal clear to which products they relate.
Make sure your prices are also ethical
The Institute of Business Ethics has suggested that companies issue statements of ethical practice in regard to their dealings with customers – and this will cover pricing too.
The statement should incorporate a declaration about what circumstances will make your company increase their prices and by how much, how prices should be conveyed to the consumer and the company's allegiance to all applicable pricing laws. The ethical pricing statement will need to be kept up to date to ensure all fresh guidelines are adhered to.
It really doesn't make any sense to confuse your customers with your pricing. Eventually, they will get wise to what you are (deliberately or otherwise) trying to do and will vote with their feet by taking their business elsewhere.
Indeed, Clive Black, an analyst at Shore Capital, said the complaint from Which? about confusing pricing had come too late as many shoppers have already abandoned the big 4 supermarkets in favour of discounters Aldi and Lidl.
It will always be sensible to price transparently because consumers are becoming increasingly savvy when it comes to comparing prices – and it might just be that what you are doing, at best, is at variance with the letter of the law – or could even be downright illegal. Do not take that risk.
What Should Be Included in Your Price List?