Retailers do all sorts of things to make their prices seem less than than they really are.
There’s that 99c thing, for starters. Apparently consumers really still do perceive R29.99 to be a lot cheaper than R30.
That’s perfectly legal, provided the person at the till doesn’t shortchange customers, claiming not to have the appropriate coins to provide the exact change.
Yes, that’s still happening.
Last week Greg Soch tweeted me – and Pick n Pay: “Pick n Pay Gallo Manor cashiers saying no 5c change. Told one of six managers standing around – looked at me like I’m mad.”
PnP’s social media monitor was on it in a flash, tweeting Soch an apology.
What is not legal is advertising the price of goods for sale as VAT-exclusive, as this misleads comparative shoppers, who only find out at the point of payment – once they are fully committed to the purchase – that the apparent bargain is suddenly 14 percent more expensive.
In September 1991, when VAT was introduced, the government heavily advertised the line “The price you see is the price you pay” to impress on consumers that no retailer could add tax to an advertised price.
That line does not mean – as many consumers fervently believe – that if a retailer has made a mistake with a price, they have to honour it and sell the item at that price. But that’s another issue for another column.
According to the VAT Act, any price advertised or quoted by a vendor must include the 14 percent VAT. It’s not acceptable to advertise VAT-exclusive prices and put a small “prices exclude VAT” line, real or virtual, somewhere in the vicinity.
According to the act, if both the VAT-exclusive and the VAT-inclusive prices for an item are displayed, they must have “equal prominence and impact”.
Clearly this is to avoid consumers’ eyes being drawn to the large-print VAT-exclusive price and missing the actual price.
Those failing to comply with the act are guilty of an offence and on conviction face a fine or imprisonment of “not more than 24 months”.
I can’t say I’ve heard of any vendor doing time for misleading consumers with VAT-exclusive prices, but I do get a fairly steady stream of complaints about stores, both online and traditional, doing this.
Colm Tonge of Joburg wrote to complain about the pricing disclosure of the “Official Springbok Online Shop”.
“I don’t think they should be allowed to display VAT-exclusive prices alone on the website, even though there is a small note to this effect,” he said.
“I understood that they should show the two prices, not just the VAT-exclusive one. I compared prices with another website, not realising that one was VAT-exclusive, and got the shock of another 14 percent being added on when it was time to pay.
“By then I had already spent a lot of time making my selections so decided to order anyway. The misleading display of the pricing got them the order and cost me money – this cannot be right.”
Tonge e-mailed the company, Signet Licensing and Marketing, expressing his objection, and received the following response: “We show ex-VAT prices as a lot of our clients are from overseas and they are not liable for VAT.
“Hence we have a clear note to say that VAT is not included in the listed price; it is then added for those who are liable to pay VAT.” Tonge was not satisfied.
I ran the case past Sars spokesman Adrian Lackay, who confirmed that the website’s pricing disclosure didn’t comply with the VAT Act, before asking the company to respond.
Chief executive Alex Cotchobos told Consumer Watch that the VAT-exclusive prices “are in no way intended to mislead consumers”.
“Given that the majority of sales on the site have historically been to international customers who are exempt from paying VAT, we believed it to be more customer-friendly to display VAT-exclusive prices with an accompanying notice advising that the prices exclude VAT,” he said.
“But we appreciate and respect our obligation to comply with the provisions of the VAT Act and we will accordingly attend to and ensure that the necessary changes are made to the site to reflect both the inclusive and exclusive of VAT prices and that both prices advertised receive equal prominence.”
To his credit, that was done immediately, and he sent me a screen grab to prove it.
Marian van Niekerk of Langebaan had a similar experience when buying a medical device from online retailer The Resonate Shop, which also displayed VAT-exclusive prices.
Owner Gisela Kolar told Consumer Watch this was an oversight and undertook to change the pricing disclosure immediately to comply with the VAT Act.
“The problem is that most of our competitors also display VAT-exclusive prices, so when consumers do comparative shopping, a VAT-inclusive price makes the product appear more expensive.”
And as many complainants have told me, by the time consumers realise that the seemingly bargain price has been bumped up with VAT – at the very last step before payment – they have invested much time and schlep in getting to that point, and usually opt to go ahead with the purchase anyway, albeit with irritation.
So if you’re shopping online, find out whether or not the prices you’re comparing include VAT.
If the VAT-inclusive price is not displayed as it should be, complain to the company concerned, and if nothing is done to rectify this, lodge a complain with Sars.
Each region has its own e-mail address, so call 0800 00 7277 to find out which applies to you. And please copy me on that e-mail.
Smooth move on the cheaper Snax, and watch out for salt!
If ever there was a case which highlighted how observant, and persistent, a consumer had to be to get to the bottom of what lay behind food labels, this is it.
On a recent domestic flight, my breakfast included one of those small yoghurt tubs.
But the piece of foil which served as a lid didn’t describe the product – Danone Nutriday Snax – as a yoghurt. It said it was a “dairy snack”, which got me wondering why, as these things are never random.
So I asked the question of Danone. Is there something about this “snack” which disqualifies it from being described as a yoghurt?
No, said communication manager Sandra Dorville.
“Snax is 100 percent a yoghurt and we can call it a yoghurt, according to current regulation.
“We chose not to, because of positioning. Nutriday Smooth and Snax are both flavoured products, and it was the only way to differentiate the affordable range from the standard range.
“From a nutritional point of view, the products are very similar. Hope it helps and answers your question.”
Well, not quite.
“I would like to know how the cost saving is achieved in the Snax product, in order for me to be able to make an informed choice,” I responded.
Dorville came back to me to say that the packaging of the “Snax” range was cheaper – there are no labels around the plastic cups – and the Snax tubs are significantly smaller than the Smooth range’s tubs: 75g versus 100g. Aha!
I dare say the size difference would be lost on most consumers – the two six-packs look pretty much the same size on the shelf.
Once again, “affordable” isn’t the same thing as “cheaper” or “better value” – it means you’re paying less but getting less, too.
It would have ended there, had I not strained my eyes to read the tiny list of ingredients printed along the outer edge of that lid label, and compare it with the ingredients of a six-pack Nutriday Smooth yoghurt.
And that’s how I discovered two glaring differences: the salt content of the Snax product is almost double that of the more expensive Smooth range – 56mg in 100g versus 31mg in 100g.
Also, while the Smooth range of yoghurts contains maize starch, not bovine gelatine, the Snax range contains both maize starch and gelatine – clearly not a product vegetarians or Hindus would want to consume.
“Please could you confirm my observations and let me know if there are any other material differences in the formulations,” I asked Dorville.
She replied: “You are 100 percent correct in your observations with regards to the gelatine and consequent sodium content, which is used in Snax but not in Smooth.
“All of this is clear from the nutritional and ingredient information on the labels. We always use a special logo on the products which are suitable for use by Hindu consumers.
“This logo is the Shuddha logo and it appears on Nutriday Smooth yoghurt labels, which is well known by Hindus and vegetarian consumers.”
What I imagine most consumers don’t realise is how much the salt content of yoghurt products varies. So if you’re wanting to reduce your – or your children’s – salt intake, scrutinise the labels. Reducing the salt content of processed food is a major international drive, given the link between high salt intake and high blood pressure, which accounts for 60 percent of strokes and 50 percent of heart disease.
Earlier this month, the government published draft regulations giving food manufacturers until 2016 to comply with a first set of sodium targets.