Unfair Trade Practices: Misleading Discount Sales

Misleading Discount Sales Discount is a term we come across so often while shopping. Sometimes we even ask for discounts. Discounts are reductions of the regular price of a product or service in order to obtain or increase sales. These discounts also commonly referred to as sales are utilized in a wide range of industries by both retailers and manufacturers. The term "discount" always signifies immediate relief with reference to the current prevailing price. What we don t understand is , the main motive behind selling any good/service is to make PROFIT. While discount shopping is a tactic that we use to make ends meet, it does not always save us money and isn t necessarily the best thing to do. Since, in India we emphasise mainly on the price than ot her factors like quality. Retailers try to mislead us by modifying the price of goods/services and offering discount on that . What is misleading pricing? The price of a good or service is often a good indication of its quality or its availability. Price comparisons can also give you an indication of whether we are getting a good deal or a bargain. When advertising or promoting the price of products or servi ces, traders must not make false or misleading representations. A trader risks breaching the law if it:
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advertises products at a specific price when it does not have a reasonable supply for consumers to purchase makes inaccurate or misleading price comparisons represents that an advertised price is the total price that you will have to pay when it is not. Bait advertising: 'Bait advertising' describes the situation when a trader advertises goods at a certain price (usually a 'sale' price) but does not hav e a reasonable supply or complex pricing (where the price depends on numerous elements which may be conditional on each other) . What is a 'reasonable supply' will depend on several things, including the type of product and the way it was promoted or advertised. For example, an electronics retailer runs a major national campaign advertising 50 -inch television at a low price of Rs 25,000 for a week-long sale. The retailer usually sells about 30 televisions of this type every week. The retailer only stocks two televisions at the advertised price and refuses to take customer orders. When customers attempt to buy the television at the advertised price, they are told it is out of stock and offere d a more expensive unit for Rs 30,000. This is likely to be bait adve rtising as the retailer does not have a reasonable sup ply of the advertised television. Sometimes a particular known branded product shown (under the discount offer) in the advertisement, attract the customers to the shop because of their colour or design etc. But that particular product is not available at the shop; instead retailer tries to sell other product, of which customers have no idea.

DEEPAK RAJ CHAUDHARY, D-19, BATCH 2011-13

Unfair Trade Practices: Misleading Discount Sales

For example, many outlets like Levis , Reebok have a particular colour T-shirt or particular design shoe at display outside but when we go inside we come to know that, that particular colour or design is not available. Hence we either have option to move out or buy other product. If a trader has genuinely underestimated the popularity of a sale product, it may not be considered bait advertising. Comparative pricing discount Comparative pricing is a marketing tool used by traders to compare current selling prices to their former or future prices. As with all forms of advertising, any claims made by traders in relation to price must be accurate and must not mislead or deceive you. The following are types of price comparison practices commonly used by traders. Was Now advertising: Products or services advertised with a 'was' 'now' price claim should accurately r eflect a comparison between the previous price ('was') and the current price ('now') being offered. Further, the actual previous price must have been offered for a reasonable period prior to the discount offer commencing so that it is a genuine offer and not just a price that has been inflated to make a sale price seem more attractive. For example, a retailer must not advertise a jacket for Rs. 750 ('now' price) discounted from Rs.1000 ('was' price), if that retailer does no t normally sell the jacket for Rs.1000 or if the jacket has been offered at the higher price for only a short amount of time . Strike-through pricing Strike-through pricing is where the higher price of a product is crossed out and a second lower price is offered. The trader must have offered these goods at the higher price for a reasonable period of time that is, it must be a genuine pre-sale price. For example, if a swing tag on a dress has a price of Rs. 1000 crossed out and a new price of Rs.700 offered, the dress must have been available at that price before the new price was applied and have been offered at that price for a reasonable period of time. Another example is Reebok , during their discount sale have stickers attached to shoes that shows different price than MRP (or they don t have MRP tag) and discount is offered on that. Comparisons with the Maximum Retail Price (M RP) Advertising or promotions of ' savings' or 'discounts' on the M RP of goods and services are designed to convince you that you a re getting a good deal because the price is less than the MRP. If traders do not nor mally price their goods at the MRP, it may be misleading to give you the impression that they do.

DEEPAK RAJ CHAUDHARY, D-19, BATCH 2011-13

Unfair Trade Practices: Misleading Discount Sales

Component pricing When advertising or promoting the price of products or s ervices, traders must specify a single total price that you will have to pay. It is unlawful for traders to represent that an advertised price is the total price when it is not. 1. Drip pricing (where optional price increments such as taxes, card charges and delivery charges are added during the buying process) : We often come across online offers that states air ticket is available at Re.1. When we open the link we get to know that there 2. Time-limited offers (for example 'offer must end today') The discount is offered on the price 3. Bait pricing (when consumers are drawn in with offers of discounts although few items are available at the discount price) or complex pricing (where the price depends on numerous elements which may be conditional on e ach other) 4. Reference pricing (such as was Rs.500, now Rs.25 0 ) 5. Volume offers, that could be multiple unit price promotions (such as three for two ) or 'Free' products offered as part of a package (such as first two months free )

DEEPAK RAJ CHAUDHARY, D-19, BATCH 2011-13