Legal Articles

Mistakes in pricing, whether in-store or online, can lead to confusion and disputes between consumers and retailers. Understanding the legal framework that governs these situations, particularly under South Africa’s Consumer Protection Act (CPA), is crucial for both consumers and businesses. This article explores the relevant laws, consumer rights, and best practices to manage such incidents.

Consumer Protection Act Regarding Prices

The Consumer Protection Act (CPA) of South Africa is designed to protect consumers against unfair trade practices, including issues related to pricing. Specifically, Section 23 of the CPA addresses price display and the obligations of suppliers regarding advertised prices.

What Is Section 23 of the Consumer Protection Act?

Section 23 of the CPA mandates that the price of goods must be clearly displayed and that consumers should not be misled by pricing. If a retailer advertises a product at a certain price, the law generally expects them to honor that price. However, there are exceptions, particularly when it comes to obvious errors.

• Error in Pricing: If a pricing mistake is apparent to a reasonable consumer—such as a car advertised for R10 instead of R100,000—the retailer may not be legally obligated to honor the incorrect price. The rationale is that no reasonable consumer would believe such a price to be accurate.

• Honoring Displayed Prices: In cases where the pricing error is not obvious, the retailer may be required to sell the product at the advertised price. This upholds the principle that "the price you see is the price you pay."

Do Retailers Have to Honour Pricing Mistakes in South Africa?

The CPA provides guidance on whether retailers must honor pricing mistakes, but it also allows for some flexibility depending on the situation:

1. In-Store Price Mistakes: If an incorrect price is displayed on a product in-store and the consumer brings it to the checkout, the retailer may be required to sell the product at that price. However, if the mistake is obvious and would not mislead a reasonable person, the retailer can correct the error without facing penalties.

2. Online Price Mistakes: Online pricing errors are treated similarly to in-store errors under the CPA. However, the difference with online sales is that a contract is usually formed once the consumer pays for the item. If the retailer detects the pricing error before the sale is completed, they may cancel the order and refund the consumer, citing the mistake.

What Are Your Rights as a Consumer?

As a consumer, you are protected under the CPA, which outlines several rights:

1. Right to Information: You have the right to be informed of the correct price of a product before making a purchase. If a pricing error is discovered after you have already purchased the item, you may be entitled to a refund or to pay the difference if the error was in your favor.

2. Right to Fair and Honest Dealing: Retailers cannot mislead you with pricing. If you are sold a product at a higher price than advertised, you can challenge the sale and potentially seek recourse through the appropriate legal channels.

3. Right to Cancel a Purchase: If you realize that you have been charged an incorrect price, you have the right to cancel the purchase and receive a full refund.

What Are the 5 Consumer Rights According to the CPA?

The CPA outlines five key consumer rights that are pertinent to issues like pricing mistakes:

1. Right to Equality in the Consumer Market: No consumer should be unfairly discriminated against, including in pricing matters.
2. Right to Privacy: Consumers’ personal information must be handled with care and confidentiality, especially in online transactions.
3. Right to Choose: Consumers have the right to select goods and services freely and must be given clear information on pricing.
4. Right to Disclosure and Information: All relevant information, including correct pricing, must be disclosed to consumers.
5. Right to Fair and Responsible Marketing: All advertising, including pricing, must be truthful and not misleading.

How Do Retailers Handle Pricing Errors?

Retailers must navigate the legal and ethical implications of pricing errors carefully. Here's how they typically handle such situations:

1. Acknowledging the Mistake: If a pricing error is identified, retailers should acknowledge it promptly and inform the consumer. Transparency is key to maintaining consumer trust.

2. Correcting the Error: Retailers can correct the price before the sale is completed. For online transactions, this might involve canceling the order and notifying the consumer of the mistake.

3. Offering Compensation: In some cases, retailers may offer compensation to consumers as a goodwill gesture, such as a discount on a future purchase, especially if the error caused inconvenience.

Overcoming Pricing Errors in Business

For businesses, pricing errors can be costly and damaging to their reputation. To avoid these pitfalls:

• Implement Double-Checks: Ensure that pricing is reviewed by multiple team members before being made public, whether in-store or online.
• Use Technology: Deploy software that flags pricing anomalies, especially for online platforms where errors can be propagated quickly.
• Train Staff: Educate employees on how to handle pricing errors and consumer queries effectively.

Van Deventer and Van Deventer Inc. - Attorneys Johannesburg and Cape Town

Pricing errors, whether in-store or online, present challenges for both consumers and retailers. The Consumer Protection Act provides a framework for handling these situations, emphasizing fairness and transparency. For consumers, knowing your rights under the CPA can help you navigate pricing disputes with confidence. For retailers, adhering to legal standards and handling errors transparently can help maintain trust and avoid legal repercussions.

If you encounter a pricing issue or need legal advice on consumer protection, the experienced attorneys at Van Deventer and Van Deventer Inc. in Cape Town and Johannesburg can provide expert guidance. Contact us to ensure your rights are protected and to navigate the complexities of South African consumer law.