New price transparency guidelines to stamp out fake discounts, hidden add-on fees in ads to kick in Nov 1; Govt studying stronger consumer protection enforcement
SINGAPORE – Businesses that engage in misleading advertising practices have two months to clean up their act.
They will not be able to, for instance, advertise airline tickets for $1,000 without stating additional charges such as a $100 booking fee and a $200 fuel surcharge upfront.
A set of guidelines that specify pricing practices that may break the law will take effect on Nov 1 and apply to all physical and online suppliers, the Competition and Consumer Commission of Singapore (CCCS) said on Monday (Sept 7).
The price transparency guidelines, first announced last year, set out how the CCCS will interpret and wield the Consumer Protection (Fair Trading) Act to stamp out errant practices, and spell out actions that businesses should take to ensure they are not infringing the law.
This comes as the CCCS is looking at beefing up its enforcement powers in administering the Act, including the possibility of being able to impose financial penalties without having to go through the courts.
While the competition and consumer watchdog does not currently have the power to issue fines, it can investigate errant businesses and file an injunction application against them.
If these businesses continue their unfair practices, they can be charged with contempt of court, which carries a fine of up to $10,000 and up to a year’s imprisonment.
The guidelines cover four areas: drip pricing, price comparison, discounts, and use of the term “free”.
1. Drip pricing
This refers to the practice of adding fees on to an advertised price during the transaction process. One common practice is excluding booking and credit card fees from the advertised price, and using pre-ticked boxes that require consumers to opt out of add-ons.
CCCS’s guidelines: Suppliers should ensure that all mandatory fees, such as taxes, service fees and surcharges, are included in the headline price. Where any mandatory fees or charges cannot be reasonably calculated in advance, their existence should be clearly indicated upfront. An opt-in approach should be used for add-ons.
2. Misleading price comparisons
Advertising a price as having an advantage over a competitor when it does not.
CCCS’s guidelines: Suppliers should ensure comparisons made with competitors’ prices are not false or misleading. Only prices of goods or services that are accepted to be similar or equivalent by consumers or trade norms should be compared, and suppliers should check and update reference prices regularly and keep records of them to prove that the price comparisons made are not false or misleading.
3. False discounts
Advertising a false discount off the usual price of a good or service. Strike-through pricing, where the original price is crossed out adjacent to the sale price, is one common method.
CCCS’s guidelines: When suppliers offer a discount or make a comparison with a usual or previous price to represent a price benefit, they should ensure it is genuine, and be able to provide a valid basis for the discount or comparison. Time-limited discounts should clearly state the applicable time period.
4. Misuse of the term “free”
Advertising a product or service as being free when conditions are attached.
CCCS’s guidelines: Suppliers should ensure any representation that the price of a good or service is free is not false or misleading. Any qualifiers, subsequent charges and terms and conditions should be stated clearly and prominently together with the “free” representation. For free trials, suppliers are also encouraged to notify consumers before the end of the trial period and provide clear information on any subsequent chargeable fees as well as the cancellation process.
The full guidelines were published on CCCS’s website on Monday after a public consultation exercise which drew 26 responses.
The guidelines were prompted by a study on the online travel booking spacelast year, which found that some consumers ended up paying more than they bargained for due to non-transparent pricing and marketing practices.
Consumers who encounter unfair practices should approach the Consumers Association of Singapore (Case), CCCS said, adding that it will monitor the conduct of suppliers and take action against those that persist in unfair trade practices.
The commission’s director for consumer protection, Mr Jack Teng, said during a virtual press conference that the CCCS takes a balanced approach in enforcing the rules, with mediation and negotiation being the first step.
He said the watchdog will look into businesses that are very persistent in their errant practices, adding: “(If) despite chances like Case approaching you and giving you chances to change and you don’t, then we will take action.”
While the Act also applies to overseas-based businesses that supply goods and services to consumers in Singapore, cross-border enforcement remains a challenge for regulators worldwide, Mr Teng noted.
“In this aspect, consumer education is very crucial. So consumers must make informed choices and if something seems too good to be true, please think twice before transacting.”
Asked by The Straits Times about the possibility of CCCS being empowered to issue financial penalties for breaches of consumer protection laws, which it is already able to do for infringements of the Competition Act, the commission’s assistant chief executive of legal, enforcement and consumer protection Lee Cheow Han said this is being looked into.
“We’ve found in some aspects there is room for us to review our…administration (of the Act), and to perhaps take a look at having some additional statutory powers, so that there can be better and more effective enforcement of the Act,” he said.
Ms Sia Aik Kor, CCCS’s chief executive, said the review is being done and more details will be announced later.
For now, the price transparency guidelines aim to provide suppliers with greater clarity on how to comply with consumer protection laws, she said.
“Suppliers also stand to gain as fair trading practices can go a long way in building a solid reputation as a trusted trader,” she said.
The guidelines are available at this website.
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