Are you up-to-date on the new Guidance for Traders on Pricing Practices?

The Chartered Trading Standards Institute (CTSI) has recently published its new Guidance for Traders on Pricing Practices. While this guidance does not alter existing rules, it serves to clarify their application, so that businesses are not caught out unknowingly.

As such, if you own or manage a consumer-facing business, irrespective of the medium used to sell to consumers, then this guidance applies to you. We recommend you take five minutes to read our short overview.

What is it?

CTSI’s Guide for Traders on Pricing Practices offers examples of best practice when dealing with consumers and assists consumer-facing businesses in their compliance with consumer protection legislation specifically, the Unfair Trading Regulations 2008 (the “Regulations”). These Regulations serve to protect consumers from misleading pricing practices.

Why you need to be aware

The regulators, the Trading Standards Services, the Competition and Markets Authority and the Advertising Standards Authority, are all empowered to refer to this guidance when making enforcement decision about a trader’s practices.

Indeed, failure to comply with the Regulations can result in fines, legal proceedings (including criminal prosecution), and negative publicity.  It is therefore prudent for all businesses who deal with consumers to pay attention to the new guidance.

For example, a franchisor’s brand and subsequently its network may suffer adverse publicity if a franchisee is found to engage in misleading pricing practices.  Similarly, a poorly devised franchisor-backed “special promotion” implemented across the network that falls foul of the Regulations could result in the embarrassment of the promotion being pulled, and at worst, the franchisor having to face the wrath of not only to consumers and regulators, but also to franchisees.

What you need to know

The guidance is held up as a measure of best practice, and the recommendation is to review it particularly before implementing special sales promotions like discounts and special offers, but also competitions and prize draws.

The general requirements which apply to pricing practices are summarised in the full CTSI report, but we’d like to highlight the certain important points below, which you may already be aware of:

• Total price

The total price of a product indicated must include all applicable taxes

• Delivery charges

Where possible, include the price for delivery and if that is not possible, state clearly that such charges will apply

• Credit and debit card fees

You cannot profit from fees you charge a customer where they use a credit or debit card for payment

• Do not exaggerate

Do not state that “all” or “everything” is subject to an offer (i.e. a discount) unless such offer literally applies

• Be genuine

A promotional offer must be genuine and must apply for a “reasonable period” unless consumers are clearly informed otherwise

• Be clear

An offer must be clear.  A simple offer must use direct and unambiguous language.  If your offer is more complex, it is your responsibility to ensure that additional language is used in a manner that a consumer can easily understand.  The additional language must not contractor (contradict?) the initial offer.

• Be truthful

Claiming an offer is for a limited time only, when it is not, is a serious offence

• Making comparisons to competitor’s offers

If you make an offer based on a competitor’s selling price and your offer is no longer advantageous as the competitor has lowered its price, you must withdraw or amend your offer

• Use your platform correctly

When using a website / digital media to communicate with customers, ensure that information is communicated clearly and within the same frame.

• Additional charges

Additional charges must be included in the up-front price if they are a compulsory part of the purchase.

These guidelines come into force in April 2017 and should serve as positive guidance to help ensure that your business’s pricing practices are legally compliant.  We encourage you to review them, implement them, and if relevant to your business, distribute them throughout your franchise network.

Want to learn more?  The full report is available here: CTSI Guidance for Traders on Pricing Practices.  Otherwise, if you’d like to speak to one of our expert commercial lawyers, please do get in touch.