Competition watchdog publishes price transparency guidelines; to come into effect in November

SINGAPORE: From November, retailers will not be able to omit mandatory fees, falsely promote "free" items or make misleading price comparisons and discount offers when advertising goods or services, under a set of guidelines on price transparency published by the Competition and Consumer Commission of Singapore (CCCS). 

These guidelines are aimed at setting out CCCS’ interpretation of the Consumer Protection (Fair Trading) Act (CPFTA) in relation to the advertisement of prices and other pricing practices, the Commission noted. 

“Transparent and accurate prices allow consumers to make informed purchasing decisions which are essential for a well-functioning market,” said CCCS in a news release on Monday (Sep 7). 

“The guidelines examine common pricing practices that may mislead consumers and infringe the CPFTA, and include actions that suppliers should take to ensure that prices and their accompanying terms and conditions are accurate and communicated clearly,” it said.

The Commission added that the guidelines - which apply to both online and physical retail stores - also set out practices that suppliers are encouraged to adopt to minimise potential disputes with consumers.

READ: Price comparison app for consumers to be rolled out across Singapore

CLEAR AND PROMINENT TERMS AND CONDITIONS

The guidelines come after a public consultation exercise, which garnered responses from 17 individuals as well as nine organisations and businesses. 

They cover four areas, including “drip pricing” - the practice of advertising products or services at prices lower than what consumers would actually have to pay. 

This would include cases where additional fees, taxes and charges are only disclosed during the transaction process.

“Where such charges cannot be reasonably calculated in advance, suppliers should disclose the existence of such such charges in a clear and prominent manner together with the headline price. The disclosure should also include any subsequent fees that a supplier or any third parties may impose on a consumer,” it said. 

The Commission gave the example of "dripping" optional charges through the use of pre-ticked boxes signing consumers up for an additional or recurring payment in fine print, as well as cases where such terms are obscured by a pop-up box. 

Such key terms and conditions should be stated “clearly and prominently” and not in fine print, which would make it likely for consumers to miss material information. 

“The use of design elements such as pop-ups and flashing banners that conceal, reduce prominence and compete for attention with pre-ticked boxes divert the consumers’ attention and increase the likelihood that consumers would miss the material information,” said CCCS. 

The Commission recommended that for the sake of transparency, retailers should adopt an approach that brings consumers’ attention to optional add-ons and requires consumers to express consent by actively checking boxes. 

They should also provide a final itemised price listing, which reflects all mandatory and optional charges to consumers before they make payment.

This should also allow them to opt out of these charges without having to restart their transaction. 

READ: Competition watchdog cites concerns over price transparency in online travel booking sector

Another area covered by the guidelines is discounts. 

The Commission said that retailers should use a “bona fide previous price” when offering discounts or making comparisons with previous prices so as to avoid misleading consumers about possible savings. 

It gave the example of a retailer pricing an item at S$30, which usually costs S$50, providing consumers a S$20 discount.

However, the retailer advertises a S$70 price benefit by temporarily pricing the item at S$100 for one day, indicating this as the usual price of the item. 

The “usual price” presented by retailers must not be one they have never offered, or one that has been offered only for an “insignificant period of time” prior to offering the discount, CCCS said. 

“Doing so could mislead consumers about the amount of savings that they can achieve and to perceive a greater price benefit than actually exists,” it added. 

Such false or misleading price comparisons could potentially infringe the CPFTA, the Commission said. 

The guidelines also cover price comparisons, with CCCS stating that comparisons made with other retailers' prices should not be false or misleading, adding that retailers should conduct their own research including comparing the prices of similar goods and services. 

Also covered under the guidelines is the use of the word "free", with the Commission noting any terms and conditions, or deferred charges should be presented in a clear and prominent manner.

Suppliers should ensure that the price of a product or service is not increased to cover the cost of a free gift or trial, CCCS said, adding that incidental costs such as shipping should also be clearly stated. 

“Suppliers should ensure that their prices are represented accurately and communicated clearly and prominently so that consumers can make informed choices and shop confidently.  Suppliers also stand to gain as fair trading practices can go a long way in building a solid reputation as a trusted trader,” said CCCS chief executive Ms. Sia Aik Kor.

“In short, the guidelines help to build a credible marketplace,” she added.

ADDITIONAL STATUTORY POWERS

Speaking to reporters during a virtual press conference on Monday, CCCS consumer protection senior assistant director Davina Wong said that as the first points of contact for consumer complaints, the Consumer Association of Singapore (CASE) and the Singapore Tourism Board (STB) would reach out to errant retailers and help clarify points in the CPFTA if needed. 

Those who persist in errant practices will face warnings or even injunctions, she added. 

Ms Wong acknowledged that there are challenges with enforcing the rules on suppliers based overseas. 

However, she pointed to the agreements CASE has signed with other jurisdictions as a possible avenue for consumers seeking redress in such instances, adding that the Commission can learn from other regulators internationally on how such issues can be resolved. 

The Commission's assistant chief executive of legal, enforcement and consumer protection Lee Cheow Han noted that CCCS has been responsible for the Act for more than two years and had found some room for it to review its administration. 

The CCCS took over the administration of the CPFTA from the now-defunct SPRING Singapore in April 2018. 

Mr Lee added that it is reviewing taking on additional statutory powers to allow for better and more effective enforcement of the Act. 

“One of the areas that we are looking at is the possibility of having this power to impose financial penalties,” he said.

“There are other areas which I can't disclose at this moment because it's work-in-progress, but definitely we are looking at a few other possibilities of increasing our statutory powers.”