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Is Multiple Pricing A Legal Business Practice?

Is Multiple Pricing A Legal Business Practice?

Multiple pricing is not legal under Australian Consumer Law. However, not all forms of multiple pricing will result in civil penalties.

1st July 2021
Reading Time: 3 minutes

Multiple pricing is not legal. However, not every form of multiple pricing will result in fines or penalties. It simply depends on the circumstances. Read on to understand what multiple pricing is, its consequences and actions business operators can take to fix these types of mistakes.

What is Multiple Pricing?

Under the Australian Consumer Law, a person or business operator must not:

  • Supply a product or service for more than one price and
  • The supply cannot be for a price that is not the lowest of the ‘displayed prices’.

If a person or business engages in this conduct, they will be in breach of multiple pricing rules.

Therefore, it is not legal for a business to sell a product or service for the higher of the two or more displayed prices. If a business supplies or sells their product for the higher of the two or more prices, they will be in breach of Australian Consumer Law. Thus, a penalty or fine may apply.

What is a ‘Displayed Price’?

A ‘displayed price’ is simply the advertised price of a product or service. In other words, it is the price of sale for that specific good or service. It is important to note that some forms of pricing will be a display price and others will not. For instance, a multiple price does not occur when a ‘new price’ is directly on top of some ‘old price’.

Displayed pricing is on products themselves before purchase, catalogues, flyers, in-store display windows, online stores, online advertisements, television advertisements and all types of other promotional/discounted advertising etc.

What to do when Multiple Pricing occurs

As stated above, multiple pricing is where businesses display more than one price for the same product or service.

If a product or service has more than one price, the business must either:

  • sell the item for the lowest displayed price or
  • withdraw the product or service until the multiple pricing has been fixed.

This means that business operators have options. They can choose to either sell the product for the mistakenly lower price, or remove it from sale. Some businesses have their own policies or codes relating to multiple pricing. A business may choose to honour the mistakenly lower price, as it is usually good business practice to do so. However, larger corporate businesses, such as Woolworths, Coles, Myers, etc have specific codes of practice in place to deal directly with multiple pricing issues.

Example

A customer wants to buy a television from X. X has both an online store and physical store. The television has an in-store display price of $1,500. However, the same television has an online display price of $1,300. As X has displayed multiple pricing for the same product, the television must sell for the lowest of the two prices. If, for commercial reasons, X does not wish to sell the television for this low price, X has the option to withdraw the sale of the television altogether. However, if X chooses to sell the television for the highest of the two prices, X will breach multiple pricing rules. X may receive fines.

Fines applicable to Multiple Pricing

A businesses breach of multiple pricing rules can result in a civil penalty or fine. Breaching these rules may result in fines of up to $5,000 for body corporates, and fines of up to $1,000 for individuals.

Some breaches of Australian Consumer Law can result in criminal offences, as well as civil penalties. To find out more, see here.

Key Takeaways

Multiple pricing is not a legal business practice. If a business sells a multiple priced product or service at its highest displayed price, or refuses to amend a multiple pricing mistake, the business may receive a fine or penalty. However, if it does not infringe consumers rights, it is likely a fine will not be imposed. This is because business are given the opportunity to fix their mistakes.

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Author
Mai Sarkissian

Mai is a Digital Marketing Coordinator at Lawpath, working as part of the Content Team. She is in her final year of a Bachelor of Laws degree at the University of Wollongong. She is interested in Business Law and Employment Law.