Tim O’Callaghan is a partner in Druces LLP, specialising in advice to the fashion and luxury goods business. In this month’s column, he discusses the legalities of altering the cost of lingerie online.
If the Government are to be believed, the Consumer Rights Act 2015, which came into force on October 1, is set to be ‘the most significant piece of consumer legislation for a generation’.
It has certainly prompted many retailers to pick up the telephone to the intimate apparel solicitor and check that their terms and conditions are compliant. A very wise course of action!
One issue that is being explored by e-tailers is the flexibility of their online pricing.
Because the technology is already in place, some online retailers are considering such ‘yield management solutions’ as:
• Varying prices for their garments at different times of the day; e.g. increasing prices at lunchtime and the evening when online shopping for lingerie tends to peak, with prices being lower in the morning and afternoon.
• Regional price variations for the same garments by people accessing the same website, but from different locations; e.g. a customer in Northern Ireland being offered a lower price to one accessing the same website and ordering from London.
Leaving aside the issue of whether such practices are commercially sensible or fair, the question that e-tailers need to know the answer to is – are such practices even legal?
To get to the answer we have to consider the newest jewel in the crown of the English legislature – the Consumer Rights Act 2015, which brings together most of the law relating to consumer legislation.
As if this gigantic new piece of legislation were not comprehensive enough, the Department for Business Innovation and Skills has also produced supplemental best practice guidance on pricing. Between the Act and the best practice guidance there is nothing to prevent such variations in price. The Act does, however, contain provisions relating to price.
The key factor in remaining compliant is complete price transparency with the customer. Provided that the customer has the option to buy the garment at the price advertised on the webpage, then no infringements relating to price will occur.
The law does not prohibit fluctuations in price (even fluctuations by the hour). Equally, the law does not prohibit offering the same products at a different price to customers in different places.
With the recent plethora of laws against discrimination, you may be forgiven for thinking that such variations in price may be discriminatory – can it really be legal to provide the same product for sale in Wales and Scotland but to make the Scots pay more? Is that not grossly discriminatory to the Scottish? The answer, perhaps surprisingly, is yes!
Provided that the price displayed on a site is the price that the customer can buy the product for, the practice is not unlawful.
For instance, there would be nothing unlawful in the following scenario: A customer accessing a loungewear website in Scotland has a page displaying a certain slip for sale at £100. That same website, if accessed in London, displays a price for the same slip as £120.
If the customer entered the transaction from the ‘Scottish webpage’ she would pay £100 for the slip, whereas if she entered the transaction from the ‘London webpage’ she would pay £120. There is nothing unlawful in this, as in each case the customer is accepting the seller’s invitation to buy at a specified price, in this case, £120 and £100 respectively.
Any online businesses considering such online strategy should be aware of the possible complication in the case of fluctuations of price over the course of a day – a customer might, for example, search for some silk pyjamas on your website in the morning, select one, at a particular price and place it in her online basket, without committing to buy.
She may return to the site in her lunchbreak to buy. The price may have increased. Would she be entitled to buy at the cheaper price that the silk pyjamas were advertised at when she put it in her online basket? The answer is no. She would have to pay the new price, the prevailing price when she actually commits to buy.
It is essential that the terms and conditions on your website state clearly that by placing products in the online basket they are not committing to buy and that prices may very between placing a product in the online basket and actually committing to the transaction.
It is also important to keep in mind the other provisions of the Act that online businesses must be comply with, there are detailed provisions relating to:
1. Information to be provided to users of the site, including information about the seller, the products, delivery, returns;
2. a specific right to cancel that the customer can exercise for any reason within 14 days (if this information is not given to the customer they enjoy a cancellation right of one year).
E-tailers are able to manipulate the price of their products provided there is no confusion about price at the moment the customer places the order. As to whether there are good commercial reasons for such price variations remains to be seen.