Current through Register Vol. 50, No. 9, September 20, 2024
A. It is a deceptive act or practice for a
seller to make a price comparison or to claim a savings, expressed or implied,
from a list price or term of similar meaning, unless:
1. the list price does not exceed the highest
price at which substantial sales of the merchandise have been made in the
seller's trade area;
2. the list
price is the price at which the seller offered the merchandise for a reasonably
substantial period of time in the recent, regular course of its business,
openly, actively, and in good faith, with an intent to sell the merchandise at
that price;
3. the list price does
not exceed the highest price at which the product is offered by reasonable
number of sellers in the seller's trade area for a reasonably substantial
period of time in the recent, regular course of business; or
4. the list does not exceed the seller's cost
plus the percentage markup regularly used by the seller in the actual sale of
such merchandise or merchandise of a similar class or kind, in the seller's
recent, regular course of business.
B. The problem with comparisons to a
manufacturer's suggested price or to a list price is that most consumers tend
to lump list prices in with all other types of price comparison. As a result,
price comparisons with phony list prices are every bit as misleading as
comparisons with phony regular prices. These rules don't prevent you from using
comparisons to list price in your ads. But as with all price comparisons, if
you use them, you must be able to show that the list price is a real price. You
can't avoid responsibility for using a phony price just because it was the
manufacturer's idea. You can substantiate a list price in any one of four
possible ways.
1. List price comparisons
comply with the rule if you can show that either:
a. the list price is the same as or lower
than the highest price at which substantial sales have been made in your trade
area; or
b. the list price is the
price at which you have offered the goods for sale for a reasonably substantial
period. This is the same requirement as in §305. A.3 regarding use of your
own former price (§305); or
c.
the list price is equal to or less than the price at which the same goods are
currently being offered by a reasonable number of sellers in your trade area.
This means that the goods must be offered by more than one or two isolated
sellers and for at least 60-90 days; or
d. the list price does not exceed the price
you would charge if you applied your usual markup to your cost of the product.
Example:
|
ABC Department Store
|
|
Men's Wear Department
|
|
Men's Wool Blend Slacks
|
|
Manufacturer's List Price
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$74.99
|
|
ABC Sale Price
|
$39.99
|
2.
a. Here,
ABC can compare its sale price with the manufacturer's list price as long as it
can show that either:
i. a substantial number
of the slacks have been sold in the area for $74.99 or more; or
ii. a reasonable number of area seller's are
currently offering them at a price of $74.99 or more; or
iii. ABC has offered them for sale at $74.99
for a reasonably substantial period in an honest and realistic effort to sell
them at that price.
b.
If ABC cannot show any of the above to be true, it may still compare its sale
price with the list price but only if its cost plus normal retail markup equals
at least $74.99.
Example:
|
ABC cost
|
$25.00
|
|
ABC normal markup
|
50%
|
c.
In this example, ABC cannot compare its sale price to the list price. This is
because cost plus 50 percent markup would only be $50, not $74.99.
AUTHORITY NOTE:
Promulgated in accordance with R.S. 51.1 et
seq.
