30 October 2019

The Competition and Consumer Commission of Singapore (“CCCS”) conducted a public consultation to seek feedback on a proposed set of guidelines on price transparency from 30 September 2019 to 21 October 2019. The proposed guidelines explain how CCCS expects the Consumer Protection (Fair Trading) Act (“CPFTA”) to operate in relation to the display/advertisement of prices and pricing practices that confer a price benefit, price advantage or complimentary good/service that consumers can enjoy. The key principle behind the proposed guidelines is that suppliers should ensure that prices and their accompanying conditions are accurate and communicated clearly, so that consumers can make informed choices.

The proposed guidelines will apply to both online and physical retail pricing practices.

Four pricing practices/strategies

The proposed guidelines focus on the following four pricing practices/strategies:

  • Drip pricing: This 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.
  • Price comparison (with other suppliers): This refers to suppliers making price comparisons with their competitors to indicate a competitive price and price advantage. For example, “best price in Singapore”.
  • Discounts: Unlike price comparisons, discounts are price benefits arising from a supplier’s offer as compared to its usual price, rather than against other suppliers’ prices. For example, “clearance sales” to clear old stocks or “moving out sales” before ending operations at an outlet.
  • Use of the term “free”: This refers to the practice of suppliers providing consumers with “free” products and services to entice consumers to try a product/service so that they may eventually buy it.

Recommended actions

In the proposed guidelines, CCCS recommends the following actions which suppliers should adopt when employing the pricing practices/strategies set out above:

Drip pricing

CCCS’ position is that suppliers should ensure that any unavoidable or mandatory fees/charges (e.g. taxes, surcharges, room cleaning fees) are included in the total headline price, or be disclosed upfront if such sums cannot be calculated in advance. Suppliers are recommended to:

  • adopt opt-in or opt-neutral approach for add-ons where consumers must actively click on checkboxes to select additional optional goods or services that they wish to purchase;
  • ensure clear, prominent, transparent and easy-to-understand disclosures of qualifiers and terms and conditions if pre-ticked boxes are used to offer goods or services; and
  • provide a final itemised price listing that clearly reflects all mandatory and optional fees/charges before consumers make payment. Consumers should also be given the opportunity to “de-select” or remove items at this stage.

Price comparison (with other suppliers)

CCCS’ view is that suppliers should ensure that any representations and price comparisons with other suppliers’ prices or the use of terms such as cost price, are not false or misleading. Suppliers are recommended to:

  • record reference prices to indicate that prices have been compared on a fair basis and that due diligence has been done;
  • use accurate reference prices by ensuring that the higher price used in a price comparison is the actual and regular selling price of the equivalent product; and
  • check the referenced price periodically for changes.

Discounts

CCCS takes the position that when suppliers offer a discount and/or make comparisons with a previous price (e.g. through strikethrough pricing) to represent a price benefit, they should use an actual, bona fide previous price (i.e. usual price) that provides a legitimate basis for the price comparison so that consumers are not misled about the savings they may achieve from purchasing the discounted product/service. Suppliers are recommended to:

  • use genuine usual prices;
  • state qualifying terms such as “up to”, “as low as” and “from” clearly; and
  • ensure that where specified, time period of discounts should not be false or misleading.

Use of the term “free”

CCCS’ position is that suppliers should ensure that any representation that the price is $0 or “free” is not false or misleading. Any qualifiers, terms and conditions and subsequent/deferred charges should be stated upfront clearly and prominently. Suppliers are recommended to:

  • clearly disclose all terms and conditions;
  • avoid raising prices to cover costs of free gifts/trials; and
  • inform consumers when free trials end.

The proposed guidelines strongly encourage businesses to adopt the recommended actions to take with regard to each pricing practice. Should businesses be unsure if a trading practice infringes the guidelines or the CPFTA, businesses may wish to consider seeking professional legal advice.

Background

CCCS developed the proposed guidelines on price transparency following findings from a market study on the online travel booking sector in Singapore. This is the first market study by CCCS that examined both competition and consumer protection issues, since CCCS took on the additional function of administering the CPFTA from 1 April 2018. The market study on online travel booking sector in Singapore was announced at CCCS’ official launch event on 9 April 2018.

Reference materials

The following materials are available on the CCCS website www.cccs.gov.sg:

 

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