‘Drip pricing’ is a practice used by some retailers during online purchasing, where a headline price is advertised up-front, but other fees and charges are added throughout the purchasing process. Often the extra fees and charges are unavoidable or are applied in most transactions, making it difficult for consumers to compare offers.
The Federal Court recently found that Jetstar Airways and Virgin Australia contravened the Australian Consumer Law (ACL) by engaging in misleading and deceptive conduct and making false or misleading representations about the price of particular advertised airfares, in proceedings brought against each of the airlines by the Australian Competition and Consumer Commission (ACCC).
“The ACCC’s concern with drip pricing has always been to ensure that consumers are not misled and that businesses are not unfairly disadvantaged by misleading practices,” ACCC Chairman Rod Sims said.
The advertised price of products should include all mandatory amounts, such as:
• taxes and duties
• credit card surcharges, if you apply them
• packaging and handling costs, for items to be shipped
• postage costs, if the customer has no option other than having the item delivered.
Only optional charges, like insurance, can be disclosed later during the purchasing process. You should also avoid ‘pre-selections’, where your checkout process automatically ticks optional extras and the customer has to untick them to avoid purchasing the optional extra.
Drip pricing conduct was a priority enforcement area in the ACCC’s 2014 Compliance and Enforcement Policy with the ACCC addressing identified behaviour across a number of industries. It remains a focus for the ACCC, as part of the ACCC’s current priority area of systemic consumer issues in the online marketplace.
If you have questions about drip pricing or any other areas of the Australian Consumer Law, contact one of our Workplace Advisors on 1800 RETAIL (738 245).