Key Points

  • Proposed changes to advertising laws will require businesses to specify a prominent "total price" in all advertisements that contain a statement about the price of consumer goods or services.
  • Businesses should review their advertising campaigns and sign off procedures to ensure good compliance and to avoid incurring penalties that will apply under the new laws.

The Federal Government has proposed changes to advertising laws which will affect the way many businesses advertise prices. The changes mean that any advertisement containing a statement about the price of goods or services will need to prominently state the "total price" of the goods or services.

The changes will apply to all consumer goods and services, except financial services.

How Will The Law Change?

The current proposal is to amend the Trade Practices Act to include a requirement for businesses to specify a prominent total price for goods or services advertised, if any part of the price is advertised.

For example:

  • It will not be lawful to advertise an airline ticket as "$299 plus fees and charges". The total amount inclusive of those fees and charges will have to be stated.
  • It will not be lawful to advertise goods or services as "$39 plus GST" - the total price with the GST must be stated.
  • It will not be lawful to advertise a new motor vehicle for sale by lease finance with the claim "from $299 per month" without a prominent statement of the total price.

Stating the total price in the fine print of an advertisement is unlikely to be enough to comply with the new laws. The new laws will require the total price to be specified "in a prominent way".

The obligation to state a total price will apply to the extent the price is quantifiable by the advertiser.

Optional Extra Charges

The obligation to state a total price will not extend to additional amounts payable for "optional extras" selected by the customer, such as additional product features, or alternative payment means which might attract an additional charge eg. by credit card.

Delivery And Handling Charges

Postage and handling charges will not need to be stated provided they are directly related to postage as well as the process of packing, moving, carrying or transporting goods.

However, where delivery is mandatory and a quantifiable charge applies, then the total price inclusive of delivery charges must be stated in the advertisement.

Any applicable stamp duty does not need to be included in a total price advertised, because it is treated as a charge imposed directly on the consumer.

What Should You Do?

Although the new laws are still in draft form and are open for comment until 17 April, we think they are close to the final version. The laws have been under consideration for two years or more, so it is unlikely there will be significant changes.

The new laws will probably come into effect later in 2008. Penalties will apply to those who do not comply with the new laws, so businesses should review their advertising campaigns and sign off procedures to ensure good compliance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.