CAP issues new guidance on RRP comparisons

Advertisements using comparisons against recommended retail prices (RRP) have long been the norm, but advertisers should be aware that these price comparisons may mislead customers if the RRP differs significantly from the price at which the product or service is generally sold.

The background 

One requirement for using an RRP is that the product must be “generally sold” at the RRP price.  This will often depend on the product and sector in which the advertisement relates.  This term has not been specifically defined.  Additionally, what constitutes “a significantly different price” can also be difficult to determine.  However, where a product is sold in a number of different retailers for similar prices and it can be proved that the advertised price is similar to those already in the market, it is unlikely that the ASA will find that the RRP differs significantly. 

The decision

The new guidance provides an insight into the ASA’s mind-set on RRPs.  It states that:

• RRPs given by the manufacturer should not be the only substantiation for savings claims:
  

  A complaint against Marcandi Ltd t/a Madbid was upheld on 22 February 2017 where the advertiser had used the RRP of a Mini ONE car on an auction site.  The ASA held that the RRP was not the price at which the product was generally sold.  Where a product is no longer on the market, it would not be possible to demonstrate the price at which it is generally sold and an RRP should not be used. 
  
  

• RRPs should not be used where the marketer is the only seller of the product:
  

  Where the price has been set by the marketer, it is unlikely to be accepted as an RRP.  If a seller wants to compare against their own selling prices, the “was £xx, now £xx” should be used instead, as stated in the Money Expert Ltd ruling on 1 October 2014.
  
  

• RRPs should not be used for products that have not yet launched:
  

  An auction website made multiple savings claims by stating the RRP for an Apple Watch which had not yet launched.  The RRP price was taken from a pre-launch news article which estimated the price range.  This was not sufficient to demonstrate that the item was generally sold at that price (Blionix Ltd t/a liklebid, 22 February 2017)
  
  

• Comparisons against advertised RRPs as opposed to the price at which the product is sold is unacceptable:
  
  
• In Colgate-Palmolive (UK) Ltd (30 October 2013), where a toothbrush was sold at the RRP of £169.99 for 12 weeks and then sold for a further 32 weeks at £84.99 or less, the ASA concluded that a claim that the product was “worth £169.99” was misleading.

Why is this important?

In the era of choice and variety, retailers will always try and differentiate themselves on cost.  It is important to bear in mind that RRP remains as a guide and that retailers cannot use it solely for the purpose of demonstrating a saving for customers where that purported saving is misleading. 

Any practical tips?

When making comparisons, retailers should consider whether the RRP really is the price at which the product is generally sold.  If there is a significant price difference between the RRP and the price at which the product or service is already on the market, using the RRP as a comparator would not be recommended (pun intended). 

If retailers are the sole seller of a product or service and want to use a price comparison for marketing, they should consider using a “was £xx/now £xx” style advertisement instead – and (naturally!) ensure that their selling processes/records can comply with the requirements of the was/now rules.