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Guidance on Pricing Practices

Thursday February 9, 2017 at 4:06pm

Laura Kelly of the IPM’s Legal Advisory Service highlights some changes to the rules on putting prices in marketing communications

The Chartered Trading Standards Institute recently released the new Guidance for Traders on Pricing Practices. It replaces the 2010 BIS Pricing Practices Guide, long used by both advertisers and regulators to help establish best practice in line with consumer protection laws. But exactly how might this change impact promotional marketing?

The first point to note is that the consumer protection laws have not changed; the guidance has been updated but the principles behind it remain the same, so it’s unlikely you will need to significantly change your current practices.  Remember the guidance is not legally mandatory but will be considered by regulators where appropriate.

The guidance provides common sense advice with practical examples, and the new document is arguably more user friendly. It breaks scenarios down into practices that are less likely or more likely to comply, rather than giving definitive rules or timespans. There are two key changes that most commenters have picked up on that are relevant to our field.

One of these is that the so called “28-day rule” has been removed. The BIS PPG stated that a period of 28 consecutive days within the previous 6 months would be deemed reasonable in terms of the least amount of time a product would need to be sold at a higher price before it could be reduced and genuinely claimed to be discounted. Some have suggested this was used to artificially inflate prices; the ASA had notably already moved away from this position in recent years, focusing on overall pricing history rather than specific figures. It is therefore best to see this as a clarification of current principles rather than a change in position.

Some commentators have noted the focus on reference pricing and advised wariness when using RRPs. The new guidance contains a link to CAP guidance on the subject, which notes that even if the RRP has been given to you by the manufacturer, if you can’t demonstrate that it is actually sold at that price it’s likely to be considered misleading. Again, while some may be surprised to discover this information it has been a long-held principle.

So, if you’re already following best practice you shouldn’t need to make any changes. If any of the above is news to you however, now’s the time to brush up!

The ASA will continue using precedent to make rulings, but it’s worth keeping an eye on future cases to see whether they change direction at all. I’ll mention any significant rulings in my Legal Scoop which you can subscribe to on the IPM website, and of course they’re likely to come up as case studies in future IPM Legal Briefings.

If you’re an IPM member and have any questions you can contact Laura at laurak@theipm.org.uk

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