CCCS guidelines provide retailers clarity on transparent pricing
The Competition and Consumer Commission of Singapore (CCCS) has introduced the Price Transparency Guidelines to provide greater clarity to suppliers on what pricing practices could potentially infringe the Consumer Protection (Fair Trading) Act (CPFTA). The guidelines, which come into effect on 1 November 2020, aim to help build a credible marketplace.
Suppliers and retailers can enable consumers to make informed choices and shop confidently by adopting good practices in the following four areas:
Drip Pricing – displaying a product/service at a lower headline price than the final price by omitting certain mandatory or pre-ticked optional add-ons.
Suppliers should ensure that any unavoidable or mandatory charges (e.g. taxes, surcharges, service fees, etc.) are included in the total headline price. Where such charges cannot be reasonably calculated in advance, suppliers should disclose the existence of such charges in a clear and prominent manner together with the headline price. The disclosure should also include any subsequent fees that a supplier or third party may impose on a consumer.
Suppliers are encouraged to adopt an “opt-in” or “opt-neutral” approach to bring consumers’ attention to optional add-ons. This enables consumers to actively check/tick a box to select the specific add-ons or options they want.
• Excluding mandatory charges or pre-ticked add-ons in the advertised price, resulting in a higher final price eventually.
• Omitting key terms and conditions, making them difficult to find or hiding them in fine print.
Price Comparison – comparing prices with competitors to reflect a competitive price or price advantage offered by a supplier
Suppliers should ensure comparisons made with other suppliers’ prices are not false or misleading. To reflect prices truthfully, suppliers should conduct their research regularly and compare only prices of goods or services that are accepted to be similar or equivalent by consumers or trade norms. Offering to provide refunds does not absolve the suppliers from the need to conduct necessary checks/research and ensure that any price representations made are not false or misleading.
Suppliers are encouraged to check and update reference prices used for price comparison regularly and to keep records of them so as to be able to prove that the price comparisons made are not false or misleading.
• Stating a competitor’s price as higher when it is not so.
• Making price comparisons that are no longer valid or current.
• Comparing prices of an older model with a competitor’s newer model with better specifications.
Discounts – offering a price benefit for a good/service in comparison with its usual price
When suppliers offer a discount or make a comparison with its usual/previous price (e.g. through strikethrough pricing) to represent a price benefit, they should ensure the discount or price benefit offered is genuine and provide a valid basis for the discount or comparison, so that consumers are not misled by the savings they may achieve.
Where it is a time-limited discount, suppliers should state the time period clearly and accurately to avoid misleading consumers. Suppliers are also encouraged to keep records of past sales and prices to prove that the past prices and discounts given are genuine.
• Advertising a product as discounted from a price that was never offered or was offered for a trivial period of time prior to discount.
• Bundling two products and pricing them at $6 during a “buy-one-get-one-free” promotion when they are available separately at $3 each.
Use of the Term “Free” – typically offered to entice consumers to try the product/service and eventually buy it.
Suppliers should ensure any representation that the price of a good or service is $0 or “free” is not false or misleading. Any qualifiers, subsequent/deferred charges, and key terms and conditions imposed on consumers as a result of their acceptance of the good or service should be stated clearly and prominently together with the “free” representation.
In the case of free trials, suppliers are encouraged to notify consumers before the end of the trial period and provide consumers with clear information on any subsequent chargeable fees as well as the cancellation process.
• Making consumers pay for the cost of a good/service which was represented as “free”.
• Increasing the price or reducing the quantity, quality or composition of a product or service to recover the cost of a free gift/trial.
• Representing a product or service as free when it is part of the package price.
For full Guidelines, please go to CCCS’s website.
For a quick overview, see the infographic here.