March 14, 2018

The ASA recently completed research into consumer understanding of reference pricing (e.g. “strikethrough” prices, “was-now” prices and RRPs). This showed that consumers have limited understanding of pricing practices in general, and reference pricing in particular, and have an expectation that reference prices are regulated and can therefore be trusted. The research also supported the ASA’s existing positions in applying the current rules.

The ASA has published a note listing the five key things to consider when stating a reference price or RRP in advertising:

• Where was the price offered? — when assessing the likelihood of consumers being misled, the ASA will consider where the ad appears and where the product was sold at the higher reference price. If an advertised reference price is not the usual selling price through the same sales channel suggested by the ad (i.e. online, in store, etc), or was only charged at a limited number of stores, it is likely to mislead consumers, particularly if no further context is given to explain the nature of the reference price;
• How long was it offered for? — the length of time a product was sold at the higher reference price will also affect the likelihood of an ad misleading consumers. Generally, the higher reference price should have been charged for a longer period of time than the promotional price. When a promotional price has been charged for longer than the higher reference price, it is likely to be considered misleading;
• How many did you actually sell? — the number of sales made at the higher price will be taken into account when considering whether reference price claims are problematic. If you cannot demonstrate significant sales at the higher reference price, or that this was a realistic selling price, the ad is likely to be problematic. What is “significant” will depend on the product and the frequency with which that type of product is usually purchased;
• How recently was the price offered? — a reference price is likely to be misleading if it is not the most recent established price at which the product was sold, particularly if no further context is given. However, if the pricing history indicates that the price was increased for a short period of time immediately before a promotional price reduction, the ASA is likely to view this as misleadingly exaggerating the saving; and
• Is the RRP the price at which it’s generally sold? — the Advertising Codes contain a specific rule about the use of RRPs (Rule 3.40) requiring that quoted RRPs do not differ significantly from the price at which a product is generally sold. You need to take care when using RRPs to ensure that they accurately reflect the price consumers will generally pay for the product across the market.

To read the advice note in full, click here. To read the ASA’s consumer research, click here.