What Is the Law on Retail Pricing

Retail stores or manufacturers may develop their own retail price regulations as long as they comply with all applicable laws. For example, manufacturers are free to set MSRPs or suggested retail prices that retailers can observe or ignore. Some manufacturers require retailers to keep prices above a certain level, while others set caps. Retailers can set their own rules that control the discounts their customers can get and the prices their sales reps can accept. A review of government regulations on pricing in advertising reveals striking similarities and major differences. Almost every state has a law that prohibits false or misleading statements about the reasons, existence, or amount of price reductions. In fact, many government regulations use exactly the same language to describe prohibited activities. Many states have also introduced rules for previous price comparisons (“was/now” prices), but unfortunately there are few similarities in detail between states. Alaska insists that regular prices be set for at least fourteen days before a discount. Meanwhile, in Massachusetts, a previous price comparison is considered valid if any of these three conditions are true: So how can a multi-state or national retailer navigate these murky waters with such cross-border regulation? Yes. However, another law – the Liquor Control Code – must also be considered. MCL 436.1101-MCL 436.2303.

Under the Liquor Control Code, spirits cannot be sold below the “minimum selling price” set by the Liquor Regulatory Commission. Spirits must be sold at a prescribed price, while beer and wine must not be sold at less than cost. MCL 436.1229. Therefore, the difference between the calculated amount and the displayed price will only be refunded if the merchant has charged more than the minimum selling price. a) Many buyers believe that a manufacturer`s list price or recommended retail price is the price at which an item is typically sold. So, if a reduction in this price is announced, many people will believe that they are being offered a real deal. To the extent that list prices or recommended retail prices do not, in reality, correspond to the prices at which a significant number of sales of the product concerned are made, advertising a discount may mislead the consumer. Price reduction occurs when retailers raise their prices to a high level, usually within a short period of time, in order to take advantage of growing customer demand or limited supply. Specific government regulations prohibit price gouging, in a number of cases. For example, starting in 2011, New York State limits retail milk prices to twice the price paid by the state`s milk processors. This prevents stores from conspiring to raise prices when customers are still likely to buy them, even at unfair retail prices. The guides then look at comparisons with recommended retail prices (MSRP) or manufacturer`s list prices.

The guides state: NOTE: The states listed above have exemptions from item prices. Be sure to consult the law or contact the state director for more information. This is a factual question that a court is best placed to answer. A store cannot knowingly charge or attempt to charge a price higher than the displayed price for that item. Therefore, the consumer may have a claim if the store does not sell the item at the displayed price. However, the consumer may encounter obstacles in convincing a court that the transaction knowingly charged the higher price if the pricing error is unintentional and results in an obvious stroke of luck for the consumer. Weights and Measures is generally the state law enforcement agency that has the power and authority to ensure compliance with its pricing laws and regulations. The source of the following information is provided annually by the Director of State. You are entitled to the difference between the displayed price and what you were charged, plus an additional compensation (“Bonus”) of ten times the difference. The bonus must be at least $1.00, but cannot exceed $5.00. If the seller does not pay the difference and bonus, you can sue for actual damages or $250.00, whichever is greater, plus attorneys` fees of up to $300.00.

[2] Disclaimer – While we have relied on a careful review of relevant documents and consulted with legal advisors familiar with fair advertising practices, Parker Avery Group is not composed of lawyers and we do not seek legal advice. We strongly recommend that you discuss advertising and pricing policies with corporate counsel or external legal representation when establishing corporate rules. This example may sound familiar to many retailers, as it describes a pervasive advertising practice. It observes that the lawfulness of the price comparison is linked to the validity of the initial or reference price (actual price in good faith) and to the duration of the offer at the reference price before the discount (normal basis or reasonable time). Second, retailers should develop concise policies or guidelines that prescribe comparative pricing practices. These guidelines should comply with applicable laws in a manner that reduces or minimizes the risk of legal action, as recommended by their lawyers. These guidelines should specifically address the different types of price comparisons used in advertising, whether it is the previous price of an item, the prevailing market price, or an MSRP (list price). In addition, those rules should specify the minimum period during which an item must be offered for sale at an unreduced price for the discount right to be valid. (c) There would be little problem of deception in this area if all products, without exception, were sold at the retail price set by the manufacturer.