INSIGHTS: Online pharmacy retailer pays $32,400 for misleading product pricing

March 10, 2016

Late last year, the Australian Competition and Consumer Commission (ACCC) issued three infringement notices to an online pharmacy retailer totalling $32,400 for representing to consumers that there were savings on recommended retail prices.

Facts

The retailer represented that, by purchasing a range of white label products online through the retailer’s website, consumers would save a specified amount off the recommended retail prices (RRP). The retailer displayed on its website statements such as, ‘don’t pay RRP $39.99’ and ‘Save $18.00’.

The natural health products range supplied by the online retailer was a private label brand that is exclusively sold by pharmacies trading under the retailer’s group. The ACCC found that the health products had never been offered for sale at the RRP by those or any other retailers in the market.

The ACCC considered the statements made potentially amounted to false or misleading representations that consumers would save money by reference to an actual market RRP for certain health products through the retailer’s group’s websites, when the products had never been offered for sale at the RRP by the retailer or by any other retailer.

False and misleading representations

Section 29(1)(i) of the Australian Consumer Law prohibits any person supplying goods or services from engaging in false and misleading representations including making a false or misleading representation that:

a. goods are of a particular standard, quality, value, grade, composition, style, or model

b. a service is of a particular standard, value, or grade

c. goods are new

d. goods or a service has the endorsement of a particular person or party.

Be aware of misleading pricing

This case is illustrative of the ACCC’s regulatory approach to pricing. The ACCC issued three infringement notices and the pharmacy group paid penalties totalling $32,400 for product pricing deemed misleading. However, it was agreed between the parties that it did not constitute an admission by the online retailer of a contravention of the CCA.

TIPS:

  • Any business using representations like ‘savings’ or ‘discounts’ when comparing a sale price to the RRP of goods and services must always ensure the RRP reflects the current market price or that there is an active market RRP to avoid the risk of misrepresentation of any savings.
  • Pharmacists should be aware that pharmacy advertising is subject to a range of additional regulatory provisions including prohibitions under the Australian Consumer Law. Articles about this will follow in future Pharmacy insights.

If you would like more information or advice on pharmacy industry regulation, please contact Michael Bracken.

This article was published in the Autumn edition of Pharmacy insights.