Brett Bolton, Special Counsel
Kate Williams, Solicitor
The Trade Practices Amendment (Clarity in Pricing) Act 2008
comes into effect on 25 May 2009. If you are a company selling
goods or services to consumers, this Act will have significant
effects on the way you advertise the price of your goods or
The Act is designed to address perceived problems arising from
the increased use of "component pricing". Component
pricing is when a business states the cost of its goods or services
as being the sum of component parts. For example, a motor dealer
who quotes the price of a motor vehicle as "$25,000 plus fees
and charges" is using component pricing.
Such pricing is considered to potentially mislead consumers
about the total price payable for goods or services.
The important changes
It is important to note that the changes will not prevent the
use of component pricing. However, where component pricing is used,
a single price figure must also be specified.
The Act says that where a company makes a statement about an
amount which only constitutes part of the price for the supply of
its goods or services, it must also specify the price as a
"single figure" and "in a prominent way".
Where does the Act apply?
The new Act only applies to statements by companies to
consumers. It does not apply to dealings between the supplier and
other businesses. However, it is important to note that the Act
will apply where your statement about price is made simultaneously
to both consumers and businesses.
The new law applies to all forms of advertising –
catalogues, websites and in store sales promotions.
The "single price"
The "single price" must be stated as a single figure
and include each of the following amounts:
a charge that must be paid by the consumer;
the amount of any tax, duty, fee or charge imposed on the
supplier of the goods or services (eg GST); and
the amount of any tax, duty, fee or charge payable by the
supplier in relation to the supply.
What about delivery charges?
You do not need to include compulsory delivery charges for goods
as part of the single price. However, if you know the minimum
delivery charge at the time you make the statement about price, you
must specify the single price for the goods together with the
minimum delivery charge.
What does "prominent way" mean?
Under the Act, a single price will not be specified in a
"prominent way" unless the single price is "at least
as prominent as the most prominent of the component parts of the
consideration for the supply". In simple terms, this means
that the single price must be easily identifiable by a
Unfortunately, the Act does not contain any clues about the
interpretation of this requirement, and it appears it will be left
to the courts to interpret the precise meaning of the requirement
in individual cases.
A breach of the Act will expose you to civil and criminal
penalties up to a maximum of $1.1million under the Trade Practices
When do the changes take effect?
As previously stated, the Act comes into effect on 25 May 2009.
Although the Act will only apply to conduct occurring after that
date, all businesses supplying goods or services to consumers will
need to be prepared for the changes.
In some cases these fees or surcharges are higher than what a bank charges to these merchants for use of the system.
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