Price Comparisons and Savings Claims

PURPOSE: The attorney general administers and enforces the provisions of the Merchandising Practices Act, Chapter 407, RSMo (1986). This rule specifies acts and practices that are deemed to be violative of section 407.020, RSMo (1986). (1) Price Comparison in General. (A) Examples: $29.99—Save $10; 20% off all men’s shirts. (B) A seller shall not make any price comparison in which the product being advertised materially differs in composition, grade or quality, style or design, model, name or brand, kind or variety, or service and performance characteristics from the comparative product, unless the seller clearly discloses the material difference in the advertisement with the price comparison. (2) Price Comparison to Seller’s Former Prices. (A) Examples: Regularly $99, Now $69; $99, Now $69—Save $30; Originally $99, Now $69; Last Year’s Price $99, Now $69. (B) A seller shall not make a price comparison to a former price, unless the comparative price is actual, bona fide and not illusory or fictitious, and is— 1. A price at which reasonably substantial sales of the product were made to the public by the seller in the regular course of the seller’s business, and on a regular basis during a reasonably substantial period of time in the immediate, recent period preceding the advertisement. There shall be a rebuttable presumption that the seller has not complied with the terms set forth in paragraph (2)(B)1. unless the seller can show that the percentage of unit sales of the product at the comparative price, or at prices higher than the comparative price, is ten percent (10%) or more of the total unit sales of the product during a period of time, not less than thirty (30) days nor more than twelve (12) months, which includes the advertisement; 2. A price at which the product was openly and actively offered for sale to the public by the seller in the regular course of the seller’s business, and on a regular basis during a reasonably substantial period of the time in the immediate, recent period preceding the advertisement. There shall be a rebuttable presumption that the seller has not complied with the terms set forth in paragraph (2)(B)2. unless the seller can show that the product was offered for sale at the comparative price, or at prices higher than the comparative price, forty percent (40%) or more of the time during a period of time, not less than thirty (30) days nor more than twelve (12) months, which includes the advertisement; 3. A price at which reasonably substantial sales of the product were made to the public by the seller in the regular course of the seller’s business, and on a regular basis during a reasonably substantial period of time in any period preceding the advertisement, and the advertisement clearly discloses, with the price comparison, the date, time or seasonal period of that offer. There shall be a rebuttable presumption that the seller has not complied with the terms set forth in paragraph (2)(B)3. unless the seller can show that the percentage of unit sales of the product at the comparative price, or at prices higher than the comparative price, is ten percent (10%) or more of the total unit sales of the product during the disclosed date, time or seasonal period; or 4. A price at which the product was openly and actively offered for sale to the public by the seller in the regular course of the seller’s business, and on a regular basis during a reasonably substantial period of time in any period preceding the advertisement, and the advertisement clearly discloses with the price comparison, the date, time or seasonal period of that offer. There shall be a rebuttable presumption that the seller has not complied with the terms set forth in paragraph (2)(B)4. unless the seller can show that the product was offered for sale at the comparative price, or at prices higher than the comparative price, forty percent (40%) or more of the time during a period of time, not less than thirty (30) days nor more than twelve (12) months, which includes or is included within the disclosed date, time or seasonal period. (C) A seller shall not make any price comparison to a former price that is not based on the price in effect immediately preceding the reduction unless the seller clearly discloses that intermediate price reductions have been made. (3) Price Comparison to Seller’s Future Prices. (A) Examples: After Sale $99, Now $69; Save $30, Now $69, Will be $99. (B) A seller shall not make any price comparison referencing a higher price at which any product will be offered or sold in the future unless— 1. The advertisement clearly discloses that the price comparison is based upon a future price increase; 2. The effective date of the future higher price, if more than ninety (90) days after the price comparison is first stated in an advertisement, is clearly disclosed in the advertisement; and 3. The future higher price increase takes effect on the date disclosed in the advertisement or, if not disclosed in the advertisement, within ninety (90) days after the price comparison is stated in the advertisement and the price increase remains in effect for at least fifteen (15) days, except where compliance becomes impossible because of circumstances beyond the seller’s control. (4) Price Comparison to a Competitor’s Prices. (A) Examples: Compare at $99, Now $69; Comparable value $99, Our price $69. (B) A seller shall not make any price comparison based on a competitor’s price unless— 1. The competitor’s price is either a price at which the competitor sold or offered products for sale at any time within the ninety (90)-day period immediately preceding the date on which the price comparison is stated in the advertisement; 2. The competitor’s price is a price that is representative of prices at which the products are sold or offered for sale in the trade area in which the price comparison is made and is not an isolated price; and 3. Disclosure is made with the price comparison that the price used as a basis for the comparison was not the seller’s own price. (C) Notwithstanding paragraph (4)(B)2., a seller may reference a competitor’s price outside the trade area in which the price comparison is made, provided the seller clearly discloses that the prices are offered by competitors in other geographic areas, clearly discloses the other geographic area in which the price comparison is made, and clearly discloses that prices may vary in the trade area in which the price comparison is made. (5) Range of Savings or Price Comparison Claims. (A) Examples: Save from 10% to 50% off. (B) A seller shall not state or imply that any products are being offered at a range of reduced prices or at a range of percentage or fractional discounts, unless— 1. The highest price or lowest discount is clearly and conspicuously disclosed in the advertisement and, if the lowest price or highest of the range of discounts is disclosed; 2. An appreciable number of items are offered at the lowest price or highest savings or discount advertised; and 3. The type size of the lowest price or highest of the range of discounts is not so exaggerated as to obscure the fact that there is a range of savings. (6) Price Comparison to List Price or Similar Comparisons. (A) A seller shall not make any price comparison to a manufacturer’s list price, a manufacturer’s suggested retail price or other similar comparisons unless— 1. The list price or suggested retail price is the price at which the product is offered by a substantial number of sellers in the seller’s trade area; 2. The list price or suggested retail price is a seller’s bona fide former price and in compliance with the provisions of 15 CSR 60-7.060(2); or 3. The seller uses its best efforts and is unable to ascertain that the list price or suggested retail price is the price at which the product is offered by a substantial number of sellers in the seller’s trade area. In this circumstance, a seller may reference a list price or suggested retail price in relation to its current price as long as no savings are claimed and the seller clearly discloses that the list price or suggested retail price may not necessarily be the price at which the product is sold in the trade area. (B) A list or suggested retail price permanently imprinted on or affixed to a product or its container by the manufacturer, and not under the control of or instigated by the seller, need not be covered or obliterated when the seller’s current offering price is attached to, printed on or placed on a label, tag or sign accompanying the product, providing that no sale is claimed and no other price comparison is made from it. (7) Use of Terms—Free, Two for Price of One, Buy One, Get One Free. (A) A seller shall not state or imply that products are being offered for free or words of similar import (Buy one pair of shoes, second pair free) unless— 1. The seller clearly and conspicuously discloses all material conditions which are imposed on the sale; and 2. The price indicated by the seller as its price for the products that must be purchased as a condition to receiving the free or bonus item is the seller’s own former or future price for those products as determined in accordance with 15 CSR 60-7.060(2) or (3). (8) Savings Claims Without Disclosing the Basis of the Comparative Price. (A) Examples: 20% off; Clearance $59, Save $30. (B) A seller shall not advertise a product as reduced in price without specifically disclosing the basis of the comparison unless the price comparison is a comparison to a seller’s former price in compliance with 15 CSR 607.060(2). AUTHORITY: sections 407.020 and 407.145, RSMo 1986.* Original rule filed June 25, 1990, effective Nov. 30, 1990. *Original authority: 407.020, RSMo 1967, amended 1973, 1985, 1986 and 407.145, RSMo 1986.