As a trader, you must comply with regulations that protect consumers from unfair commercial practices. The regulations ban business practices that might persuade people to buy a product they might not otherwise have bought. They also require traders to give clear and correct information about their selling prices.
Implementing best practice guidelines when you provide information about your selling prices will help you comply with the law and make sure you don't mislead people.
This guide recommends a set of best practice guidelines and outlines the main steps you should take when you provide pricing information. It also explains where you can find more detailed information and help with pricing issues.
There are several pieces of legislation that protect people from the activities of unscrupulous or dishonest traders.
Consumer Protection from Unfair Trading Regulations 2008
If you sell goods or services to consumers, you must comply with the Consumer Protection from Unfair Trading Regulations 2008. These regulations ban traders from using any unfair commercial practices which mislead customers into buying goods or services they might not otherwise have bought. Commercial practices are any actions you take - or omissions you make - that are directly connected to supplying goods and services to members of the public.
Commercial practices include providing information about prices. The regulations specifically ban traders from:
- misleading consumers about an item's price, or the way in which the price is worked out
- misleading consumers by claiming a price advantage that doesn't exist - for example making a false claim that your products are cheaper than a competitor's
- leaving out details of extra hidden costs - such as taxes, delivery or postal charges
You'll also need to comply with other legislation that covers pricing practices, including the:
- Consumer Rights Act 2015
- Consumer Credit Act 1974
- Price Marking Order (Northern Ireland) 2004
There are specific regulations covering pricing information provided by certain types of business.
There are also rules governing misleading advertisements.
Business to business
If your customers are other businesses, you'll need to comply with the Business Protection from Misleading Marketing Regulations 2008. These regulations cover:
- misleading pricing information
- when a business can use advertising that identifies a competitor or their products and services
Price comparison rules
Consumer protection regulations ban traders from giving false or misleading pricing information that could make a consumer buy something they might not otherwise have bought. The regulations ban:
- false or misleading information about the way a price is worked out
- misleading omissions from pricing details - such as extra delivery charges on top of the advertised price
If you're going to make any form of price comparison for your products or services, you should be able to:
- justify the comparison
- show that any claim you make is accurate and valid - and in particular that any price advantage you claim for your products is real
When you make any price comparisons, it's important to:
- compare like with like
- make sure the basis of the price comparison is reasonable in terms of time - it's advisable to make a new lower price available for a shorter period than a previous higher price you offered
- explain the price comparison clearly and unambiguously so that consumers can easily identify the previous higher price and the new lower price
- make it clear what sort of price the higher price is - for example any comparison that uses the words 'normal price' should also say what the normal price is
- write out descriptions of price comparisons in full - except for the abbreviations 'RRP' - recommended retail price - and 'man rec price' which you can use
Price comparison rules: previous prices
If you make price comparisons with your own previous prices, you should take care to:
- explain the price comparison clearly and unambiguously
- make sure the price you use for the comparison is your most recent price that was available for 28 days in a row or more - if you use an earlier price you'll need to make that clear
- include details of both the previous and the new price
- make sure the basis of the price comparison is reasonable in terms of time - ideally the period during which the new price is available shouldn't be longer than the period during which the old higher price was on offer
- avoid comparisons with prices that you offered more than six months ago
It's important to make sure that the previous price you refer to is a genuine retail price. A price is genuine if you would reasonably expect to sell a significant volume of goods at that price, or if you would have offered the goods for sale at that price for a reasonable period - such as 28 days.
Price comparison rules: competitors
If you make price comparisons with another trader's prices, you should take care that these don't mislead people by:
- giving false or misleading information
- leaving out important relevant details
- presenting the information in a deceptive way
To comply with consumer protection regulations, you should make sure that:
- the other trader's price that you quote is accurate and up to date
- you show the other trader's name clearly and prominently
- you make it clear when the other trader's price applied and in what circumstances
- the other trader's price is for the same product as yours - if it's for a similar product, you'll need to explain the differences
- you compare prices for goods that are supplied in the same quantity or the same state - or you explain any differences clearly
- you compare prices for goods that are sold in the same area, unless it makes no difference because there's a national pricing policy in place
- you don't make price promise claims about own-brand goods that aren't available from other retailers - for example, by offering to refund the difference in price to a customer if they can buy a certain product more cheaply somewhere else when that product is only available from you
- you can support any 'best price' claims with evidence showing that you're offering a lower price than your competitors
Price comparison rules: recommended retail prices, sales, offers
When you're comparing your products' prices with other prices there are some situations where you'll need to take special care not to mislead people.
Comparison with a recommended retail price or similar
If you make a price comparison, you shouldn't use a recommended retail price (RRP) or a similar price if:
- it isn't genuine
- it's very different to the price you normally sell the product for
- you're the only business that supplies the goods in question
If the manufacturer of a product has included a printed price reduction like '10p off RRP' on the packaging, you should pass this on to your customers.
If the item carries a pre-printed price that's higher than the price you'll charge, you're making a price comparison. You should treat the pre-printed price in the same way as an RRP.
Sales and special events
The rules covering pricing information also apply to sales and special events. Key requirements include:
- if you buy goods in specially for a sale, and you make this clear to consumers, you shouldn't quote a higher price when you say that the goods are special purchases
- if you display a general notice advertising a reduction from the marked price, the notice should make it clear if the marked price on individual items isn't your own previous price
- you shouldn't use general notices advertising a reduction like '50 per cent off' unless the biggest reduction you quote applies to at least 10 per cent of the range of products on offer when your sale starts
- if you extend your sale period you should make the new circumstances clear
Free offers and similar promotions
The law bans traders from describing a product as 'free' if a customer has to pay anything for it apart from any unavoidable cost of responding to the offer and the cost of collection or delivery.
You should make it clear exactly what people have to do to get a free or reduced-price offer - for example, collecting tokens or paying for delivery.
Price comparison rules: perishables, distance sales, further reductions
There are guidelines to help you when you make price comparisons in special cases such as:
- on food, drink and perishable goods
- in distance selling contracts
- when you're making a series of reductions
Food, drink and perishable goods
Generally, the price you should use for any price comparison is your most recent price available for 28 days or more in a row. However, if you reduce an item of food or drink for quick sale because it's close to exceeding its shelf life, you can use a previous price that applied for a shorter period if this is reasonable in the circumstances. The price you use for the comparison should be the last price that the product was on sale at in the same outlet.
This also applies to perishable non-food items if they have a short shelf life - for example, less than six weeks.
If you only sell products through distance contracts so there's no face-to-face contact with your customers, you shouldn't make a price comparison with a previous price that wasn't your own last price.
You might sell the same products for different prices from different types of outlet - for example online and in your shop. If you compare one price with another that's available in a different outlet, you'll need to explain this clearly.
Making a series of reductions
If you advertise a price reduction and then offer further discounts, the first reduction may have applied for a shorter period than would generally be considered reasonable when compared to the original full price. Where this happens, you should make sure people can understand the reductions by showing the:
- highest price
- reduced price or prices
- current selling price
Price comparison rules: conditional and introductory offers
There are special guidelines to follow when you make price comparisons during introductory offers and other promotional activities.
When you provide pricing information, you should take care not to:
- call a promotion an 'introductory offer' if you don't intend to offer the same product for sale at a higher price later
- let an offer go on for such a long time that it's misleading to call it 'introductory' - it's best to say when the offer will end and stick to it
- indicate an after-promotion price for an item if you don't intend to offer identical products at that price for a reasonable time - you should clearly explain what you mean if you quote a future price
Comparisons with prices related to different circumstances
The law says that all price comparisons should be fair and reasonable. If you're not comparing like with like, you should give a clear and unambiguous explanation of the differences.
Carefully consider making price comparisons for:
- different quantities - for example, 30 pence each or four for a pound
- goods in a different condition - such as a reduction for seconds
- goods in a different state - such as a lower price for something that needs home assembly
- different availability - for example, a reduction in the price of goods that are normally only available to order
- special groups of customers - such as discounts for pensioners
Avoid misleading pricing information
Consumer protection legislation bans traders from giving misleading information about prices. This could include quoting a price that's lower than the one that actually applies to persuade a customer to buy something they might not otherwise have bought.
You must not show one price in an advert, on a website, in a window display, on shelf marking or on the item itself and then charge a higher price at the point of sale or checkout.
There are also specific regulations that apply to particular types of sale or ways of selling - including:
- distance selling contracts
- package travel
- estate agency
Your local trading standards service can advise you on the specific regulations that apply to your type of business.
All the pricing information that you give to consumers must include VAT at the appropriate rate. You must display the total price prominently so people can see it clearly.
If all of your trade is with business customers, you can legally display VAT-exclusive prices, so you can show the net price and the VAT separately.
Price indications that later become misleading
You should monitor all your pricing information to make sure it hasn't become misleading. For example, a price you quoted previously may no longer be accurate because you haven't updated it following a change in the VAT rate.