The Consumer Protection (Code of Practice for Traders on Price Indications) Approval Order 2005

• Citation: S.I. 2005/2705
• Sections: 84

Section 1

This Order may be cited as the Consumer Protection (Code of Practice for Traders on Price Indications) Approval Order 2005 and shall come into force on 21st October 2005.

Section 2

The Consumer Protection (Code of Practice for Traders on Price Indications) Approval Order 1988 is hereby revoked.

Section 3

The Secretary of State hereby approves the Code of Practice which is set out in the Schedule to this Order issued by him for the purposes of—

(a) giving practical guidance with respect to the requirements of section 20 of the Consumer Protection Act 1987; and

(b) promoting what appear to the Secretary of State to be desirable practices as to the circumstances and manner in which a person gives an indication as to the price at which goods, services, accommodation or facilities are available or indicates any other matter in respect of which any such indication may be misleading.

Section 1 The Consumer Protection Act

Section 20 of the Consumer Protection Act 1987 makes it a criminal offence for a person in the course of his business to give consumers a misleading price indication about goods, services, accommodation (including the sale of new homes) or facilities. It applies however you give the price indication—for example, in a TV or press advertisement, on a website, by email or text message, in a catalogue or leaflet, on notices, price tickets or shelf-edge marking in stores, or if you give it orally, for example on the telephone. The term “price indication” includes price comparisons as well as indications of a single price.

Section 1.1.1

Information on different kinds of price comparisons is given in the paragraphs below, although it is the provisions of the Consumer Protection Act 1987 relating to misleading price indications with which you will ultimately need to comply. Generally, you should compare like with like and where a reduced price is claimed then the product should have been offered for sale at the higher price for at least 28 days in the previous 6 months in the same outlet. If your comparison does not meet those criteria then you should provide an explanation which is unambiguous, easily identifiable and (except where it is impractical, for instance, in distance contracts that are concluded orally) clearly legible to the consumer.

Section 1.1.2

Always make the meaning of price indications clear. Do not leave consumers to guess whether or not a price comparison is being made. If no price comparison is intended, do not use words or phrases which, in their normal, everyday use and in the context in which they are used, are likely to give your customers the impression that a price comparison is being made. Price comparisons should always state the higher price as well as the price you intend to charge for the product (goods, services, accommodation or facilities). Do not make statements like “sale price £5” or “reduced to £39” without quoting the higher price to which they refer. If you refer to the previous price for the purpose of claiming there has been a reduction it should be to the cash price. If it is not, then an unambiguous, easily identifiable and clearly legible explanation of what the previous price referred to should be given.

Section 1.1.3

It should be clear what sort of price the higher price is. For example, comparisons with something described by words like “regular price”, “usual price” or “normal price” should say whose regular, usual or normal price it is (eg “our normal price”). Descriptions like “reduced from” and crossed out higher prices should be used only if they refer to your own previous price. Words should not be used in price indications other than with their normal everyday meanings.

Section 1.1.4

Do not use initials or abbreviations to describe the higher price in a comparison, except for the initials “RRP” to describe a recommended retail price or the abbreviation “man. rec. price” to describe a manufacturer’s recommended price (see paragraph 1.6.2).

Section 1.1.5

Follow the part of the Code (sections 1.2 to 1.6 as appropriate) which applies to the type of comparison you intend to make.

Section 1.2.1

In any comparison between your present selling price and the last selling price at which the product was offered, you should state the previous price as well as the new lower price.

Section 1.2.2

In any comparison with your own previous price—

(a) the previous price should be the last price at which the product was available to consumers in the previous 6 months unless the situation covered by paragraph 1.2.8 below applies;

(b) the product should have been available to consumers at that price for at least 28 consecutive days in the previous 6 months; and

(c) the previous price should have applied (as above) for that period at the same outlet where the reduced price is now being offered.

The 28 days at (b) above may include public holidays, Sundays or other days of religious observance when the outlet was closed (or otherwise unavailable for business); and up to 4 days when, for reasons beyond your control, the product was not available for supply. The product must not have been offered at a different price between that 28 day period and the day when the reduced price is first offered.

Section 1.2.3

If the previous price in a comparison does not meet one or more of the conditions set out in paragraph 1.2.2 above then—

(a) the comparison should be fair and meaningful;

(b) give a clear and positive explanation of the period for which and the circumstances in which that higher price applied. The explanation should be unambiguous, easily identifiable and clearly legible to the consumer.

For example “these goods were on sale here at the higher price from 1st February to 26th February” or “these goods were on sale at the higher price in 10 of our 95 stores”. Display the explanation clearly, and as prominently as the price indication . You should not use general disclaimers saying for example that the higher prices used in comparison have not necessarily applied for 28 consecutive days.

Section 1.2.4

A previous price used as a basis of a price comparison should be a genuine retail price. It should be a price at which you offered the goods for sale in the reasonable expectation that they could be sold by you at the higher price. In any case where a sale price is compared to a price that is higher than the usual retail price in the particular outlet, that fact should be made clear.

Section 1.2.5

For any food and drink you need not give a positive explanation if the previous price in a comparison has not applied for 28 consecutive days, provided it was the last price at which the goods were on sale in the previous 6 months and applied in the same outlet where the reduced price is now being offered. This also applies to non-food items, if they have a shelf-life of less than 6 weeks.

Section 1.2.6

Where products are sold only through distance contracts, any comparison with a previous price should be with your own last price. If you sell the same products for different prices in different types of outlets (e.g. charging a different price in your High Street store compared to a direct sale from your website), the previous price should be the last price at which you offered the product at the outlet in relation to which the claim is made. You should also follow the guidance in paragraphs 1.2.2(a) and (b). If your price comparison does not meet these conditions, you should follow the guidance in paragraph 1.2.3.

Section 1.2.7

Retailers located in factory outlets sites (i.e. sites where it is a condition of tenancy that a substantial majority of the goods must be sold at a discount), who have not sold the same goods at a higher price in the same store, may display an unambiguous, easily identifiable and clearly legible general notice stating that all (or a specified proportion) of goods have been bought in from elsewhere, which may include outlets outside the UK. Specific comparisons and reductions made for particular items must comply with the other relevant guidance in this Code of Practice and they must be verifiable in the event of a challenge by the local Trading Standards Service or Home Authority.

Section 1.2.8

If you advertise a price reduction and then want to reduce the price further during the same sale or special offer period, the intervening price (or prices) need not have applied for 28 days. In these circumstances unless you use a positive explanation (paragraph 1.2.3)—

(a) the highest price in the series must have applied for 28 consecutive days in the last 6 months at the same outlet;

(b) you must show the highest price, the intervening price(s); and

(c) the current selling price.

Section 1.3.1

Do not call a promotion an introductory offer unless you intend to continue to offer the same product for sale at the same outlet after the offer period is over and to do so at a higher price.

Section 1.3.2

Do not allow an offer to run on so long that it becomes misleading to describe it as an introductory or other special offer. What is a reasonable period will depend on the circumstances (but, depending on the shelf-life of the product, it is likely to be a matter of weeks, not months). An offer is unlikely to be misleading if you state the date the offer will end and keep to it. If you then extend the offer period, make it clear that you have done so.

Section 1.3.3

If you indicate an after-sale or after-promotion price, do so only if you are certain that, subject only to circumstances beyond your control, you will continue to offer identical products at that price for at least 28 days in the 3 months after the end of the offer period or after the offer stocks run out.

Section 1.3.4

If you decide to quote a future price, write what you mean in full. Do not use initials to describe it (eg “ASP”, “APP”). The description should be clearly and prominently displayed, with the price indication.

Section 1.4.1

Comparisons should be fair and reasonable. You should only compare like with like or very similar products in terms of quality, composition and description. If there is a difference, then an unambiguous, easily identifiable and clearly legible explanation of the difference(s) should also be provided. This section covers comparisons with prices—

(a) for different quantities (eg “15p each, 4 for 50p”);

(b) for goods in a different condition (eg “seconds £20, when perfect £30”);

(c) for a different availability (eg “price £50, price when ordered specially £60”);

(d) for goods in a totally different state (eg “price in kit form £50, price ready-assembled £70”); or

(e) for special groups of people (eg “senior citizens' price £2.50, others £5”).

Section 1.4.2

Do not make comparisons with prices related to different circumstances unless the product is available in the different quantity, conditions etc at the price you quote. Make clear to consumers the different circumstances which apply and show them prominently with the price indication. Do not use initials (eg “RAP” for “ready-assembled price”) to describe the different circumstances, but write what you mean in full.

Section 1.4.3

If you do not have the perfect goods on sale in the same outlet—

(a) follow section 1.2 if the “when perfect” price is your own previous price for the goods;

(b) follow section 1.5 if the “when perfect” price is another trader’s price; or

(c) follow section 1.6 if the “when perfect” price is one recommended by the manufacturer or supplier.

Section 1.4.4

Only make comparisons with goods in a totally different state if—

(a) a reasonable proportion (say a third by quantity) of your stock of those goods is readily available for sale to consumers in that different state (for example, ready assembled) at the quoted price and from the outlet where the price comparison is made; or

(b) another trader is offering those goods in that state at the quoted price and you follow section 1.5.

The price of a collection of items should only be compared with the previous price of the same collection of items, unless any differences are explained in an unambiguous, easily identifiable and clearly legible way.

For instance, do not compare the price of a complete fitted kitchen with the price of the items when sold separately, unless this difference is explained in an unambiguous, easily identifiable and clearly legible way.

Section 1.4.5

If you want to compare different prices which you charge to different groups of people (eg one price for existing customers and another for new customers, or one price for people who are members of a named organisation (other than the trader) and another for those who are not), do not use words like “our normal” or “our regular” to describe the higher price, unless it applies to at least half your customers.

Section 1.5.1

Comparisons should not be misleading. Only compare your prices with another trader’s price if—

(a) you know that the other trader’s price which you quote is accurate and up-to-date — if the comparison becomes misleading it should be removed as soon as is practicable;

(b) you give the name of the other trader clearly and prominently, with the price comparison;

(c) you identify the circumstances where the other trader’s price applies; and

(d) the other trader’s price which you quote applies to the same product — or to substantially similar product and you state any differences clearly (see paragraph 1.4).

Comparisons should also be with prices of outlets in the same locality, unless it can be shown that it makes no difference because of a national pricing policy.

Section 1.5.2

Do not make statements like “if you can buy this product elsewhere for less, we will refund the difference” about your “own brand” products which other traders do not stock, unless your offer will also apply to other traders' equivalent goods. If there are any conditions attached to the offer (eg it only applies to goods on sale in the same town or excluding Internet sales) you should show them clearly and prominently, with the statement.

Section 1.5.3

“Lowest price” claims must be backed up by suitable evidence to show that the trader is offering a lower price than competitors. Offering a “price promise”, eg to beat a competitors' cheaper price if informed of that price by a customer, does not, of itself, justify a “lowest price” claim if the latter cannot be supported. You should make clear that the claim is limited to a price matching promise if that is the case.

Section 1.6.1

This Section covers comparisons with recommended retail prices, manufacturers' recommended prices, suggested retail prices, suppliers' suggested retail prices and similar descriptions. It also covers prices given to co-operative and voluntary group organisations by their wholesalers or headquarters organisations.

Section 1.6.2

Do not use initials or abbreviations to describe the higher price in a comparison unless—

(a) you use the initials “RRP” to describe a recommended retail price; or

(b) you use the abbreviation “man. rec. price” to describe a manufacturer’s recommended price.

Write all other descriptions out in full and show them clearly and prominently with the price indication.

Section 1.6.3

Do not use a recommended price in a comparison unless—

(a) you can show that it has been recommended to you by the manufacturer or supplier as a price at which the product might be sold to consumers;

(b) you deal with that manufacturer or supplier on normal commercial terms. (This will generally be the case for members of co-operative or voluntary group organisations in relation to their wholesalers or headquarters organisations); and

(c) the price is not significantly higher than prices at which the product is generally sold at the time you make that comparison.

Do not use an RRP or similar for goods that only you supply.

Section 1.7.1

Make sure you pass on to consumers any reduction stated on the manufacturer’s packaging (eg “flash packs” such as “10p off RRP”).

Section 1.7.2

You are making a price comparison if goods have a clearly visible price already printed on the packaging which is higher than the price you will charge for them. Such pre-printed prices are, in effect, recommended prices (except for retailers' own label goods) and you should follow paragraphs 1.6.1 to 1.6.4. You need not state that the price is a recommended price.

Section 1.8.1

Do not compare your prices with an amount described only as “worth” or “value”.

Section 1.8.2

Do not present general advertising slogans which refer to “value” or “worth” in a way which is likely to be seen by consumers as a price comparison.

Section 1.9.1

If you have bought in items especially for a sale, and you make this clear, you should not quote a higher price when indicating that they are special purchases. Otherwise, your price indications for individual items in the sale which are reduced should comply with section 1.1 of the Code and whichever of sections 1.2 to 1.6 applies to the type of comparison you are making.

Section 1.9.2

If you just have a general notice saying, for example, that all products are at “half marked price”, the marked price on the individual items should be your own previous price and you should follow section 1.2 of the Code.

Section 1.9.3

Do not use general notices saying, eg “half price sale” or “up to 50% off” unless the maximum reduction quoted applies to at least 10% of the range of products on offer at the commencement of the sale.

Section 1.10.1

Make clear to consumers, at the time of the offer for sale, exactly what they will have to buy to get the “free offer”. If any sort of direct payment is required (eg postal or delivery charges) and is not referred to in the price indication, this may be misleading.

Section 1.10.2

If you give any indication of the monetary value of the “free offer”, and that sum is not your own present price for the product, follow whichever of sections 1.2 to 1.6 covers the type of price it is.

Section 1.10.3

If there are any conditions attached to the “free offer”, give at least the main points of those conditions with the price indication and make clear to consumers where, before they are committed to buy, they can get full details of the conditions.

Section 1.10.4

Do not claim that an offer is free if—

(a) you have imposed additional charges that you would not normally make;

(b) you have inflated the price of any product the consumer must buy or the incidental charges (for example, postage or premium rate telephone charges) the consumer must pay to get the “free offer”; or

(c) you will reduce the price to consumers who do not take it up.

Section 2 The Consumer Protection Act

This Code of Practice is approved under section 25 of the Act, which gives the Secretary of State power to approve codes of practice to give practical guidance to traders. It is addressed to traders and sets out what is good practice to follow in giving price indications in a wide range of different circumstances, so as to avoid giving misleading price indications. The Code is not comprehensive. It cannot address every circumstance in which a misleading price may be given, particularly for new and innovative selling practices. It is guidance, rather than mandatory, although it may be taken into account in establishing whether an offence has been committed under the Act. You may, therefore, still give price indications which do not accord with this Code, provided they are not misleading. Equally, compliance with specific aspects of the Code will not, of itself, establish that a price indication is not misleading. Where an offence of giving a misleading price indication is alleged, a Court would have regard to all the relevant circumstances.

Section 2.1.1

The Consumer Protection Act 1987 makes it an offence to indicate a price for goods or services which is lower than the one that actually applies. You should not therefore show one price in an advertisement, website, window display, shelf marking or on the item itself, and then charge a higher price at the point of sale or checkout. In addition, specific regulations apply to particular types of sales and ways of selling—eg retail sales (including the Internet), sales of food and drink which involve service, distance contracts, resale of tickets, package travel, etc. Your local Trading Standards Services or Home Authority will be pleased to advise you on the current regulations that are relevant to your business and of any good practice guidance which is also relevant.

Section 2.2.1

Make clear in your price indication the full price consumers will have to pay for the product. The consumer should always be fully aware of the total cost including eg postage, packing, delivery charges, insurance, etc. before they commit themselves to the purchase. Some examples of how to provide this information in particular circumstances are set out below.

Section 2.2.2

Where the price you are quoting for products only applies to a limited number of, say, orders, sizes or colours, you should make this clear in your price indication in an unambiguous, easily identifiable and clearly legible way (eg “available in other colours or sizes at additional cost”).

Section 2.2.3

If the price you are quoting for particular products does not apply to the products in the form in which they are displayed or advertised, say so clearly in your price indication. For example, advertisements for self-assembly furniture and the like should make it clear that the price refers to a kit of parts.

Section 2.2.4

If you sell by distance contract, make clear any additional charges for postage, packing or delivery, so that consumers are fully aware of them before they commit themselves to buy. Where you cannot determine these charges in advance, you must indicate clearly how they will be calculated (eg “Royal Mail rates apply”), or specify the place where the information is given.

Section 2.2.5

If you sell goods from an outlet and offer a delivery service for certain items, make it clear whether there are any separate delivery charges (eg for delivery outside a particular area) and what those charges are, before the consumer is committed to buying.