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High prices
The Australian Consumer Law does not regulate the pricing of products and services. If consumers think a business is charging too much, they may wish to offer feedback directly to the business, or to the relevant industry association, for their consideration.
Businesses may charge what they see as a fair and reasonable price, except when pricing is regulated or otherwise fixed. There are also laws against businesses colluding to inflate or control prices. This is known as cartel conduct or price fixing.
A business is generally not obliged to list or display its prices. However, if it does, the price must be genuine and not misleading. In addition, a business should take note of the following rules.
Multiple pricing
Multiple pricing occurs when a supplier displays more than one price for the same product. In this situation the business must sell the product for the lowest displayed price, or withdraw it from sale until they correct the price.
A price published in a catalogue or advertisement is a ‘displayed price’. If mistakes in catalogues or advertisements have occurred, they can be fixed by publishing a retraction in a publication with a similar circulation or audience to the original advertisement.
Component pricing
A supplier must not promote or state a price for products or services that represents only part of the cost, without also prominently advertising the single (total) price. The single price must be as clear and obvious to a consumer as the most prominent component of the price.
Where a service is supplied under a contract that provides for periodic payments, the single price does not have to be displayed as prominently as the component prices. However, the supplier must take care to promote the price in a way that is not deceptive, false or misleading.
The single price does not have to include a charge for sending product from the supplier to the consumer, unless the supplier is aware of a minimum charge that must be paid.
The single price is the total of all measurable costs and includes:
- any charge payable, and
- the amount of any tax, duty, fee, levy or charges (for example, GST).
Civil and criminal penalties apply for failing to comply with single price requirements.
Drip pricing
Drip pricing is where a single price is advertised at the beginning of an online shopping process, and further fees and charges are slowly added (or ‘dripped’). This can result in the consumer paying a higher price or spending more than they realised they would.
Businesses must include all charges in the advertised price of their goods and services up front. This includes charges for pre-selected options. Consumers may deselect options they do not want, as they go through the buying process.
Example:
A flight on an airline website is advertised at $100. As the consumer is making the purchase, there are two pre-selected options – travel insurance for $20 and a seat with extra leg room for $10. The flight must be advertised at $130 up front.
When shopping online, consumers should:
- be aware of misleading drip pricing practices when shopping for services - these can be common in the airline, ticketing, accommodation and vehicle rental sectors
- consider all applicable charges together – do not just focus on the advertised price. This may not be the cheapest final price. It is also a good idea to shop around
- be prepared to not proceed with the transaction, especially when additional charges start being added
- look out for pre-selected options; reject anything they do not want to include in the purchase
- carefully check the booking before making any final payments.
Civil and criminal penalties apply for conduct that misleads or deceives consumers about the price of products or services. Drip pricing can be a failure to comply with single price requirements if all of the components of the advertised costs could have been presented as a single price from the beginning.
Restaurants, cafes and bistros
Restaurants, cafes and bistros often apply a surcharge on Sundays and public holidays.
If they do, their menu must include the words "a surcharge of [percentage] applies on [the specified day or days]". These words must be displayed at least as visibly as the most prominent price on the menu on the day or days the surcharge applies.
If the menu does not list prices, the applicable surcharge amount must be easily seen and visibly displayed so that diners are aware of the additional costs before ordering.
Penalties may apply if a business does not comply with single price requirements.
Change of mind
A store does not have to give a refund or replacement if a consumer simply changes their mind about a product. This includes if they find the same product or service cheaper from a different supplier.
Some stores have an in-store policy to offer a refund, exchange or credit note if a customer changes their mind. For more detail, view Change of mind.
Price matching
Some businesses promise to match (or better) the prices of competitors if a consumer can find the same product for the same (or a cheaper) price elsewhere.
Businesses that have price-matching policies must make sure they do not:
- take away the customer's rights under the Australian Consumer Law
- present information in a misleading or deceptive way
- omit important information relevant to the price match, or bury it in any fine print.
We cannot provide tailored advice on whether an in-store policy is valid or legal.
For more information on consumer rights, see Guarantees that apply automatically.
Was/now pricing
Businesses often make comparisons between product prices and the:
- product’s previous pricing
- 'cost' or wholesale price
- competitor's price
- recommended retail price (RRP).
Was/now pricing, also known as 'two-price advertising' and 'strike through' pricing, occurs when a business advertises that a product was a certain price but is now on sale for a lower price.
If a business offers was/now pricing, it must make sure it does not mislead consumers. Saying that a product 'was $100 now $50' or ‘$100 $50’ may be considered misleading if, in any period before the sale began:
- that product was not sold at $100 for a reasonable period
- the business only sold a few of the products at the higher price.
For more information on misleading pricing, see Misleading and deceptive conduct.