May 2009

Trade Practices Compliance: New Laws on Component Pricing

On 25 May 2009 amendments to Section 53C [1] of the Trade Practices Act 1974 (Cth) came into force changing the rules for component pricing. Component pricing is where the cost of goods or services is represented or specified in or as a sum of multiple components. For example

  • Airline ticket prices include a number of price components including the cost of airline fees, taxes, surcharges, booking fees, credit card and other charges.
  • Motor vehicle prices include the cost of the vehicle, delivery charges, on road costs, and taxes.

If you use component pricing in your advertising, you must also provide consumers with a prominent single total price for the goods or services. This is subject to the qualification that the amounts can be quantified at the time the price representation is made. The total price must be stated in at least the same prominence as the most prominent component.

Each component must be included and the total price prominently displayed. You are required to include the following components:

  • Charges of any description payable by a consumer to purchase the goods or services (eg, booking fees, compulsory service charges, administration fees, surcharges).
  • Taxes, duties, fees, levies or charges payable by the consumer for the supply of the goods or services (eg, GST or sales tax).

It is not necessary to include the following components:

  • Optional extras, ie additional amounts the consumer chooses to pay.
  • Sending or delivery charges, however these need to be specified or included in the total price.
  • Any non-quantifiable components.
  • Third party payments paid by your business that are not passed on to the consumer.

The ACCC has indicated that it will take action to enforce these new component pricing requirements. Failure to comply can result in substantial penalties being imposed by the Courts. Consumers can also make claims for loss or damage suffered as a result of the total price for goods and services not being specified or the price being specified in such a manner that it could be false or misleading.

Businesses can avoid costly mistakes by having advertising and promotional material reviewed to ensure compliance with the Trade Practices Act.

For further information about Trade Practices compliance (including the new component pricing requirements) and other consumer protection laws, contact:

Katarina Klaric

Principal

Alan Moyle

Consultant

Stephens Lawyers & Consultants
Level 3, 530 Lonsdale Street
Melbourne VIC 3000
Phone: (03) 8636 9100
Fax: (03) 8636 9199
Email: stephens@stephens.com.au
Website: www.stephens.com.au
All Correspondence to:
PO Box 13286
Melbourne Law Courts
Melbourne VIC 8010

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Disclaimer: This newsletter is not intended to be a substitute for obtaining legal advice.

© Stephens Lawyers & Consultants, May 2009. Researched and written by Katarina Klaric and Alan Moyle.


[1] "s 53C Cash price to be stated in certain circumstances

A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services, make a representation with respect to an amount that, if paid, would constitute a part of the consideration for the supply of the goods or services unless that corporation also specifies the cash price for the goods of services."

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