Reforms Ensure the Price is Right

Date: Jul 02, 2009
Document Type: Newsletter

The ACCC is urging businesses to make customers aware of the total cost of goods and services, following amendments to section 53C of the Trade Practices Act 1974.

Clarity in pricing helps consumers and businesses

Until now, businesses could advertise a component of the total price for goods or services, subject to hidden fees and charges.

According to ACCC Chairman, Graeme Samuel, this not only confused consumers but also disadvantaged businesses that did �the right thing� by customers. A business that showed consumers the total price would be disadvantaged against a competitor who featured only part of the price.

Your obligations

The new section 53C requires advertisements and other representations to include:

  • The total amount (the minimum quantifiable consideration)- This includes not only the direct cost of the goods or services, but also taxes, duties, fees, levies or charges payable by the consumer for the supply of the good or service.
  • As a single figure (the �single price�)
  • In a prominent way - The ACCC advises businesses to consider the size, colour and type of font used for describing the price and its placement compared with the advertisement's background and relative to the advertising medium being used.

However, a number of charges may be excluded from the single price, including:

  • Optional extras�additional charges that a consumer may choose to pay;
  • Sending charges�which may be stated elsewhere in the advertisement; and
  • Any components that are not 'quantifiable' at the time the representation is made.

If goods or services are supplied under contract for periodic payments, the total contract amount (single price) must still be displayed in a prominent way, although the periodic payments may be more prominent.

Further, the amendments do not apply to business to business transactions and financial services.

Compliance

The clarity in pricing amendments have implications for a range of common small business scenarios. For example, restaurants must now produce separate menus if weekend or public surcharges apply and retailers can no longer advertise periodic payments without including the total contract amount.

Section 53C applies to all businesses, large and small. As such, criminal sanctions of up to $1,100,000 apply initially, with the Federal Government expected to add a range of civil penalties with the introduction of the Australian Consumer Law.

The ACCC has developed a range of guidance material to ensure businesses avoid penalty. Alternatively, ask your lawyer to advise whether the price is right at your business.

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