Component pricing and motor vehicle advertising

• What is component pricing?
• The law
• What does this mean for you and your business?
• Other relevant sections of the ACL

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What is component pricing?

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 Australian Consumer Law (ACL), which is contained in a schedule to the Competition and Consumer Act 2010, because it could mislead consumers into thinking that a product or service is being offered at a lower price than what it actually is.

The law

The rules for component pricing are contained in s. 48 of the ACL. This section requires that if you choose to show a particular component of a price in advertisements, you must also provide consumers with a prominent single (total) price for goods or services—as it is able to be quantified at the time you make a price representation.

What does this mean for you and your business?

Businesses are perfectly entitled to use component pricing in there advertising but must 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 ACL

As well as s. 48, ss. 18 and 29 of the ACL are particularly relevant to motor vehicle price representations.

Section 18

This is the general provision prohibiting misleading or deceptive conduct.

Section 29

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. 29(i). The ACCC actively promotes compliance with these price related provisions of the ACL. To assist participants in the motor vehicle industry to comply with their obligations, the ACCC has published industry-specific guidance materials on component pricing.

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