No more fake promotions

Black Friday ‘promotions’ have become the subject of many memes. Among other things, they ridiculously depict situations in which the goods sold have not actually changed their previous price, but a higher, but crossed-out price has been added next to it. This is all done in order to make the consumer feel like he or she is getting a unique bargain. This behaviour of sellers was taken to task in the Omnibus Directive. To quote a classic, the European legislator said a definite NO to false promotions!

Changes for traders 

The fight against fraudulent offers of discounted goods or services has, of course, come at the price of the introduction of obligations to which traders (including those who have never used deceptive sales methods or promotions) must adhere.

Transparency requirement 

By the Act of 9 May 2014 on the provision of information on the prices of goods and services (hereinafter: the ‘Pricing Act’), regulations were introduced specifying how the seller is to inform about the prices of the goods and services offered. Article 4 of the Pricing Act indicates how the price and the unit price of goods or services are to be made visible at the place of retail sale and provision of services (also on the Internet). This is to be done in a way that is unambiguous, clear and allows the consumer to compare prices.

Price history

This means that a seller who decides to inform potential buyers of a reduced price for a good or service will have to additionally display the lowest price of the good or service in the 30 days prior to the reduction.

On the other hand, if the good or service is new and has been offered for sale for less than 30 days, the seller will, in addition to the information on the reduced price, provide the consumer with information on what was the lowest price during the period from the date of release to the market.

Reductions in price for food (or other goods which are perishable or have a short shelf life) will also be subject to the obligation to indicate the reduced price and the price before the reduction was first applied.

Importantly, the obligation to include the said information will not be limited to shop shelves or websites. Traders advertising their discounted goods in the media, internet, leaflets, newspapers, etc., will have to provide the ‘price history’ also in the content of the advertisement itself.

Example:

On 1 December, shop X priced its goods - a flannel blanket in the shape and design of a tortilla - at PLN 100. During the Christmas period, the manager of shop X decided to temporarily increase the price of the above-mentioned goods in such a way that from 15 December, they would cost PLN 120. After Christmas, the goods were included in the post-season sale and on 29.12, they were priced at PLN 80.

If shop X decides to additionally inform consumers about the fact that the price of the goods has been reduced, then on 29.12, in addition to the price of 80 PLN, it should also contain information that the previously applicable price was 100 PLN, and not 120 PLN, so the price of the goods decreased by 25%, and not by 50%.

Because the price of PLN 100 was the lowest price within the last 30 days, it should constitute the base amount for calculating the reduction.

Not every seller covered by the new obligations

First of all, it follows from the wording of the new provisions that the obligation to inform about the reduction will not cover a seller who reduces the price, but does not inform the potential buyer about it. Thus, he does not use the reduction as a marketing method.

This is because the provisions of Article 4 of the Price Act will apply to any price reduction that is communicated to consumers by a trader who is the actual party to the contract with the consumer. Therefore, the absence of information about the reduction means that there is no obligation to inform about the price history.

Furthermore, online trading platforms or other intermediaries such as Ceneo are excluded from the application of the indicated provisions. However, a condition for the exclusion is whether the platform in question is not the actual seller of the goods or is not selling on behalf of another trader. Therefore, if it only has an informative role for the consumer (it is not involved in the transaction), the new regulations will not cover its owner.

Long-term arrangements that allow consumers to systematically benefit from reduced prices and specific individual price reductions will also not be covered by the new regulations. These are all kinds of loyalty programmes or personalised price reductions, which are not widely advertised to consumers, but more often by means of individual communications.

Traders who advertise with marketing assurances about ‘best/lowest prices’ will also not be covered by the obligations under the new legislation. It is sufficient that designated marketing efforts promoting their offer by comparing it with other sellers' offers do not refer to a specific price reduction or create the impression that one has been applied.

Other techniques of promoting price advantage that are not price reductions are also covered by the exemption. These include, for example, price comparisons or bundled (conditional) offers. However, it must not be forgotten that the indicated treatments are subject to the provisions of the Act on Counteracting Unfair Market Practices.

How to make a price reduction visible?

The way in which a price reduction is communicated to consumers can take different forms. For example, the trader may choose to announce the price reduction in percentage terms (%), e.g. ‘20% cheaper’, or as a specific amount, e.g. ‘10 zlotys cheaper’, by indicating the new (lower) price together with the previously applied (higher) price. The seller can also cross out the old price and next to it state the new price including the lowest price information 30 days before the reduction. This can be done with any other promotional technique, e.g. ‘Today cheaper by VAT’, which informs the consumer that the price reduction is equal to the value of VAT (which does not mean that VAT is not charged). In such a situation, the current price shown is the ‘starting’ price and at the same time a higher price is given as the upcoming normal price of the good in question.

‘But I only sell to businesses!’

The regulations introduced, contrary to popular opinion, do not only apply to consumer-business relations. They also apply to businesses which, although they sell geared towards businesses (B2B), at the same time also allow consumers to buy. Consequently, an online health and safety shop (by definition serving mostly other entrepreneurs), which allows an individual (consumer) to create an account and make a purchase, will be obliged to apply the new rules.