Knowledge Highlights 8 September 2020
On 7 September 2020, the Competition and Consumer Commission of Singapore (“CCCS”) announced the publication of the Guidelines on Price Transparency (“Guidelines”). The Guidelines which aim to provide greater clarity on what pricing practices could potentially infringe the Consumer Protection (Fair Trading) Act (“CPFTA”) will apply to all suppliers, whether operating online or in physical stores, from 1 November 2020.
CCCS administers the CPFTA, which seeks to protect consumers against unfair trading practices in Singapore. The Guidelines indicate the manner in which CCCS would interpret the CPFTA in relation to the display/advertisement of prices and pricing practices such as time-limited discounts, free offers and price comparisons. The key principle behind the Guidelines is that suppliers should ensure prices and their accompanying conditions are accurate and communicated clearly and prominently, so that consumers can make informed choices.
CCCS will work with relevant partners such as the Consumers Association of Singapore (CASE) and trade associations to reach out to suppliers. CCCS will monitor the conduct of suppliers and take action against errant suppliers who persist in unfair trade practices.
The Guidelines cover four key pricing practices: drip pricing, price comparison, discounts, and use of the term “free”.
“Drip pricing” refers to the practice of advertising a product or service at a lower headline price (i.e. displayed/advertised) than the final price that a consumer would pay. A common method to “drip” optional charges is through the use of pre-ticked boxes.
Suppliers should ensure that the total headline price includes any unavoidable or mandatory charges (e.g. taxes, surcharges, service fees, etc.). The existence of such charges should still be disclosed in a clear and prominent manner together with the headline price where these charges cannot be reasonably computed in advance. The disclosure should also include any subsequent fees that a supplier or third party may impose on a consumer.
When prices are displayed to consumers in Singapore dollars but payments are processed outside Singapore, suppliers should clearly and prominently disclose that the transaction is a cross-border one that may involve unavoidable additional fees associated with currency conversions or cross-border payments that may only be disclosed to the consumer when he receives his bill.
The Guidelines provide that potential CPFTA infringements include charging a substantially higher price than the advertised price, omission and concealment of material facts, and supply of unsolicited goods and services.
Set out below are CCCS’s recommended good practices:
- Adopt “opt-in” or “opt-neutral” approach for add-ons
- Clearly display hyperlinks to terms and conditions accompanying pre-ticked option(s)
- Provide a final itemised price listing
2. Price comparison
Suppliers are known to make price comparisons with their competitors to indicate a competitive price and/or a price advantage.
Suppliers should ensure comparisons made with other suppliers’ prices are not false or misleading. To reflect prices truthfully, suppliers should conduct their research regularly and compare only prices of goods or services that are accepted to be similar or equivalent by consumers or trade norms. Offering to provide refunds does not absolve the suppliers from the need to conduct necessary checks/research and ensure that any price representations made are not false or misleading.
According to the Guidelines, potential CPFTA infringements include misrepresenting a price advantage and omission and concealment of material facts. CCCS’s recommended good practices are to record and update reference prices periodically.
3. Prohibited discounts
Unlike price comparisons, discounts are price benefits arising from a supplier’s comparison to its usual price, rather than against other suppliers’ prices.
The Guidelines provide that potential CPFTA infringements include misrepresenting (i) a price benefit, (ii) duration of a sale or (iii) discount terms. CCCS’s recommended good practices are to use bona fide prices (i.e. when making comparisons with usual past prices, suppliers should ensure that the previous price has been offered for a reasonable period), keep records of past sales and prices and state the time period clearly and accurately for time-limited discounts.
4. Commercial use of the term “free”
Suppliers are known to provide consumers with “free” products and services, especially to entice consumers to try a product/service, so that they may eventually buy it. When doing so, suppliers should ensure any representation that the price of a good or service is $0 or “free” is not false or misleading, and to state clearly and prominently any qualifiers, subsequent/deferred charges, and key terms and conditions imposed on consumers as a result of their acceptance of the good or service.
Suppliers using the term, “free”, could mislead consumers and potentially infringe the CPFTA, should suppliers seek compensation, whether partial or in full, or in other ways to recover the cost. Suppliers should ensure that the price of a product/service is not increased to cover the cost of a free gift/trial and to clearly state any “incidental cost” at the outset (e.g. shipping fees for the free gift). Suppliers should not try to recover costs by reducing the quantity, quality or composition of the product/service.
For free trials, CCCS’s recommended good practice is for suppliers to notify consumers before the end of the free trial period and provide clear information on the cancellation process.
The following materials are available on the CCCS website www.cccs.gov.sg: