Two-price advertising

Two-price advertising

Two-price advertising is the sales and marketing practice of showing customers two prices, a supposed normal price and a lower price which is claimed to be a special offer or discount; but where in fact the stated normal price is a fiction.

The idea of two-price advertising is to present an "apparent" saving, usually very substantial, as a way to attract customers. The term two-price advertising only refers to those cases where the "normal" price claimed is designed to deceive.

Regulatory treatment of the practice varies around the world. At its most blatant it's a clear deception and likely to come under false advertising or fair trading laws. The practice normally takes place only in retail marketing. Certain industries tend to be more prone to it than others.

Australia

In Australia two-price advertising comes under the Trade Practices Act 1974 as misleading conduct. The Australian Competition and Consumer Commission (ACCC) is responsible for enforcing that act and it cooperates with the various state-government departments of fair trading or consumer protection which also investigate such matters. For example ahead of Mother's Day in 2006 the ACCC and state authorities issued joint warnings about jewelry prices shown in catalogues. [ [http://www.accc.gov.au/content/index.phtml/itemId/6116 Nation-wide monitoring of jewellery advertising] , Australian Competition and Consumer Commission press release 10 May 2006] Jewelry and carpet rugs seem to be industries frequently associated with two price advertising.

In 2002 the retail chain Allans Music Group was prosecuted by the ACCC over a catalogue Allans issued in 2000 showing musical instruments at prices heavily discounted from stated normal prices. [ [http://www.austlii.edu.au/au/cases/cth/federal_ct/2002/1552.html ACCC v Allans Music Group Pty Ltd] , Federal Court of Australia report, at AustLII] They pled guilty to 9 of the 18 counts and were fined $80,000. The court was satisfied the "was" prices shown were not prices that had been offered prior to the sale.

One thing the case showed was that a disclaimer in a catalogue may not be a defence. [ [http://www.freehills.com.au/publications/publications_5039.asp Was: apparently a great marketing ploy. Now: unwanted attention from the ACCC] , Freehills lawyers article, 19 March 2003] Allans had fine print saying the savings were off recommended retail prices (RRPs), but that was only suppliers' recommendations and no doubt on legal advice they chose not to rely on it as a defence or as mitigation. Justice Tamberlin took it as right that they should not do so, describing that fine print as "obscure and totally inadequate". In fact the disclaimer worked against the company as it indicated to the judge they knew their claims needed explanation and were not an accident.

References


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