31.01.2023

How to communicate price reductions in promotions and sales correctly?

Since 1 January 2023, sellers operating both online and in store have been struggling with introducing the changes adopted as a result of the implementation of the Omnibus Directive, whose aim is to strengthen consumer protection. In connection with these changes, the Trading Standards Authority has begun inspections at retail chains to check whether and how traders communicate price reductions. In addition, the Office of Competition and Consumer Protection (UOKiK) has checked almost 40 websites of e-commerce entrepreneurs in various sectors (clothing, cosmetics, footwear, sports equipment, electronic equipment, online platforms).

The most important changes resulting from the implementation of the Omnibus Directive aimed at strengthening consumer protection include: the requirement for transparent information about price reductions, clear rules for offer placement in search results, a ban on implying that published consumer reviews are true if a trader has not implemented mechanisms to secure their reliability. At the same time, the amendment to the consumer law regulations has also introduced new information obligations, such as: providing the telephone number, informing whether and how the trader verifies the reviews provided and, in case of trading platforms, indicating whether an offer comes from a trader or a private person.

NEW OBLIGATIONS RELATED TO PRICE REDUCTIONS

A trader who advertises a promotion or sale must indicate, in a prominent place next to the goods, not only the current price, but also the lowest price of the last 30 days preceding the reduction. The information must be presented in an unambiguous and incontestable manner and allow for comparing the prices. This obligation applies to traders selling in brick-and-mortar stores and to those selling online, as well as to TV and radio advertisements for goods.

If a trader sells goods both in physical stores and online, then, when informing about price reductions, they must indicate the lowest price in force during the 30-day period prior to the introduction of the reduction in the particular means of sale, i.e. the physical or online store.

The obligation imposed on traders is aimed at enabling the consumers to verify the actual price reductions and preventing unfair practices pursued by traders so far – apparent promotions that mislead the consumers.

Consumers can be informed of a price reduction in various ways – by stating the percentage reduction, the discount by a specific amount or a reduction by the VAT amount, by crossing out the old price and stating the new price, or by including the ‘sale’ sign. However, regardless of the form of communication chosen, the lowest price for the goods or services over the last 30 days prior to the reduction must be indicated.

An exception is made for perishable products, in which case traders are obliged to display the current price and the price before the discount was first applied. In case of products which have been on offer for less than 30 days, the lowest price from the launch until the price reduction must be displayed. Traders do not have to display the lowest price before the reduction, if they choose not to announce a promotion or sale when lowering the regular price. Slogans promoting sale offers by comparisons being general marketing statements (e.g. best, lowest prices) and bundles (e.g. multibuys) are also exempt from the new regulations.

In the event of confirming a violation of the collective interests of consumers, the President of UOKiK may impose a penalty of up to 10 per cent of the turnover for an enterprise and up to PLN 2 mln for the person managing thate enterprise.

RESERVATIONS OF THE PRESIDENT OF UOKiK

In connection with the inspections carried out by the Trade Standards Authority and the UOKiK’s verification of the practices applied by entrepreneurs in their online stores, UOKiK has published some practical guidelines on its website on communicating price reductions and listed its observations made as a result of the inspection: ”retailers should indicate the lowest price from the 30-day period preceding the introduction of the reduction in a clear and unambiguous manner. The lowest price may be crossed out (as long as it is still legible). Next to the price displayed as the reference price, traders should indicate that this is the lowest price in the last 30 days preceding the reduction. Presenting this message after the link has been expanded or in a much smaller font than the reduced price, or using illegible colour or low contrast, are examples of bad practice. The information about the lowest price should be presented right next to the current price. If traders lower the price more than once in 30 days, they may additionally inform the consumers about the previous prices. However, this should not mislead the consumers and distract from the lowest price in the 30 days preceding the introduction of the reduction. 

Example: A correct communication of additional prices could be: “PLN 80 instead of PLN 100 (the lowest price in the 30 days preceding the introduction of the reduction). Excluding promotional periods, our regular price in the last X days was PLN 120” (in the same font)”.

Example: if the slogan reads ‘50% less’ and the lowest price in the last 30 days preceding the information about the reduction was PLN 100, the seller will have to present PLN 100 as the reference price from which the 50% reduction is calculated, even though the last sale price was different”.

The information made available on UOKiK’s website shows that the reservations of the President of UOKiK were raised by the following practices:

  • stating the current selling price and the crossed-out price without informing what the crossed-out price is,
  • stating the current sale price and the crossed-out price, where the message explaining that the crossed-out price is the lowest price of the product in force in the last 30 days before the discount was introduced is available only after expanding it,
  • using other reference values than the lowest price in 30 days before the reduction to present discounts (crossed-out prices),
  • calculating the amount of discount (e.g. 20%, PLN 150) with reference to the last or standard price of the goods, not the lowest price in the last 30 days,
  • using words other than ‘the lowest price in 30 days before the introduction of the discount’, for example: ‘reference price’, ‘previous/last lowest price’, ‘price from 30 days before the promotion’,
  • presenting information about the lowest price in force in 30 days before the introduction of the discount in an illegible way: font, colours, contrast.

Loyalty programmes (i.e.: discount cards, coupons entitling to price discounts) are, in principle, exempt from the duty to provide information about the lowest price in 30 days preceding the reduction, if they actually refer to custom price reductions. However, if the price reduction applies to all or part of the customers, then the lowest price in the 30 days preceding the reduction must be indicated.

Example: on a retailer’s website, a consumer sees sees a notice available to the general public that when a particular code is entered, the price will be reduced. In this situation, the retailer must ensure that the ‘earlier’ of all goods subject to the reduction is the lowest publicly available price in the last 30 days preceding the introduction of the reduction.

FURTHER ACTIONS OF UOKiK

In a communication posted on its website, UOKiK informed in the near future it would be checking:

  • whether and how online traders who publish consumer reviews inform about the manner of verifying their reliability (if they do not carry out such verification, they should also directly inform consumers about it),
  • whether and how trading platforms inform about the main parameters determining the order in which products appear in search results, and whether and how they disclose which offers are paid advertising or get a higher placement as a result of a payment,
  • whether and how platforms inform about the status of persons offering goods or services – whether they are entrepreneurs or private persons (in the latter case, they are also obliged to inform about the non-application of consumer protection legislation),
  • whether online traders provide telephone numbers allowing for effective contact with them.

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