Advertising Changes For Your Business - News Article 21/05/08
Overview
The Federal Government will be introducing changes in advertising laws later this year which will make it a requirement for all businesses to specify prominently a ‘total price’ in all advertisements that have a statement about the price of consumer goods or services. A failure to follow the new laws can result in a prosecution involving the incurring of fines and other penalties.
Like all laws policed by the Australian Competition and Consumer Commission (the ACCC), businesses can expect these to be policed vigilantly. It is more than likely they will come into operation later this year so any future advertising should take into account these requirements. A good sign off and compliance scheme will avoid the pitfalls, time and expense of responding to the ACCC’s enquiries or prosecutions.
Changes
The Commonwealth Government has proposed changes to advertising laws which will affect the way many businesses advertise prices. The changes mean that any advertisement containing a statement about the price of goods or services will need to prominently state the "total price" of the goods or services. These changes will apply to all consumer goods and services other than financial services. The current proposal is to bring in amendments to the Trade Practices Act.
For example:
- We have all seen the adverts of airlines stating their fares as "$99 plus fees and charges". The total amount inclusive of those fees and charges will have to be stated and the current practices will be unlawful.
- Services or goods can’t be advertised as $99 plus GST – the total price including the GST will need to be stated or displayed.
- It will not be lawful to advertise a new motor vehicle for sale by lease finance with the claim "from $299 per month" without a prominent statement of the total price.
Because the requirements are to state the price ‘in a prominent way’, it is probably also unlikely to be enough to comply with the new laws and open to scrutiny or prosecution by stating the total price in the fine print of an advertisement. The obligation to state a total price will apply to the extent the price is quantifiable by the advertiser.
The obligation to state a total price will not extend to additional amounts payable for "optional extras" selected by the customer, such as additional product features, optional extras, or alternative payment means which might attract an additional charge eg. by credit card. Likewise, postage and handling charges will not need to be set out as long as they are directly related to postage as well as the process of packing, moving, carrying or transporting goods. However, where delivery is mandatory and a quantifiable charge applies, then the total price inclusive of delivery charges must be stated in the advertisement.
Any applicable stamp duty does not need to be included in a total price advertised, because it is treated as a charge imposed directly on the consumer.
If you need any help in reviewing your advertising, then feel free to call us.
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