We wanted to alert retail readers to these developments in price advertising laws in the United Kingdom from our friends at Lewis Silkin.
Late last year new U.K. Pricing Practices Guidelines were published by the Chartered Trading Standards Institute, replacing the long standing guidelines which retailers and advertisers had been following for many years.
The new Guidelines are not just an edit of the old ones. They are a root and branch reform, taking a “principles-based” approach to the advertising of prices, consistent with the same principles based approach enshrined in the Consumer Protection Regulations 2008.
The ‘grace period’ to become compliant with the Guidelines expired on 31st March, so trading standards, the Advertising Standards Authority (ASA) and the Competition and Markets Authority (CMA) will all now be expecting advertisers and retailers to be compliant with the new Guidance.
The attached briefing note sets out the key changes from the old Guidance, particularly in relation to the use of “reference prices” to make sales and savings claims, as well as general savings claims. The old certainties enshrined in the “28-day rule” for reference prices and the “10%” for general savings claims have been replaced by much more amorphous principles based guidance.
Price indications to consumers have always been the area of greatest concern to both the self-regulatory body, the ASA – the UK’s equivalent to the NAD – and the statutory regulator the CMA, and its predecessor, the Office of Fair Trading (OFT) – the UK’s equivalent to the FTC. A few years ago, the OFT conducted an in-depth study into bad practices in price advertising. Armed with the new, improved Guidelines, we fully expect the CMA to be on the look-out for potential prosecutions that will provide an opportunity to stamp out these bad practices, particularly in relation to the use of misleading savings claims.
Even before new Guidelines had been published in their final form, the ASA had already published adverse adjudications in relation to various contentious practices, such as failing to give delivery prices before consumers had made the “transactional decision” to add goods to a basket on their website (Amazon August 2016); using unsubstantiated Recommended Retail Prices as a reference price for a savings claim (Amazon December 2016); and quoting a price for a package holiday based on a dynamic pricing system when that price was no longer applicable (lastminute.com January2017).
So advertisers need to be acting now to ensure that all price indications to consumers are compliant with the new Guidelines to avoid the possibility of reputational damage from an upheld ASA complaint, or worse still, a criminal prosecution by trading standards or the CMA.