Component pricing is the representation of the cost of a good or service to consumers in, or as the sum of, multiple component parts. If a price represents some but not all of the components, it risks contravening the Trade Practices Act 1974 because it could mislead consumers into thinking that a product or service is being offered at a lower price than what it actually is.
What do these changes mean for you and your business?
As a result of the changes, you may need to revise and modify your advertising practices. While you can still use component pricing, you must from 25 May 2009 also include a figure for the total price at least as prominently as the most prominent component. This means that a consumer should be able to easily identify the total cost of a vehicle, at least as easily as they may identify a component or part of that total. For example, if a single price is in text that is smaller or in a colour that is harder to read than any component price, it is likely the single price is not as prominent as the component.
Other relevant sections of the Trade Practices Act
As well as s. 53C, ss. 52 and 53 of the Trade Practices Act are particularly relevant to motor vehicle price representations.
Section 52
This is the general provision prohibiting misleading or deceptive conduct.
Section 53
This prohibits the making of false or misleading representations. In particular, a representation that the price is the whole of the consideration when in fact it constitutes only part of the consideration for the goods or services is likely to breach s. 53(e). The ACCC actively promotes compliance with these price related provisions of the Act. To assist participants in the motor vehicle industry to comply with their obligations, the ACCC has published industry-specific guidance materials on component pricing.
