Pretoria - “Good day, Wendy. Yesterday I saw an advert on a website, for a desktop computer for R765. I called the company to place an order, and was informed that the salesperson was not in.
“This morning I received the following e-mail from a representative of the company: ‘Hi, please note that the price advertised on that item was human error. I have since removed it. Sorry for any inconvenience caused.’
“Are they still obliged to give me the item at the price as advertised yesterday? Thank you, Sanjay.”
This is a variation of a question I get often. The short answer is no, but it’s tricky, given that the Consumer Protection Act (CPA) appears to give contradictory advice about “pricing errors”.
Neville Melville, who was recently appointed as the Consumer Goods and Services Ombudsman, has released a detailed “advisory note” on this issue.
Section 23 of the CPA states that if a displayed price contains an inadvertent and obvious error, the supplier is not bound by it, provided they correct the error and take “reasonable steps” to inform consumers who may have been exposed to it.
Then Section 30 says: “A supplier must not advertise any particular goods or services as being available at a specified price in a manner that may result in consumers being misled or deceived (about) the actual availability of those goods or services from that supplier, at that advertised price.
“If a supplier advertises goods as being available at a specified price, and the advertisement expressly states a limitation in respect of the availability of those goods, the supplier must make those goods or services available at that price, to the extent of the expressed limits.”
So Section 30 refers to adverts, and Section 23 refers to displayed prices. “But unlike the latter, Section 30 does not specify how errors are to be dealt with, nor what the position is if a limit was not placed on the numbers available,” Melville says.
Clearly that’s a problem, because in most internet adverts, such as the one Sanjay responded to, there is no limit placed on the number of items on offer.
But the price of that PC was clearly an “obvious error”. The ombudsman then summarised how several other countries’ laws deal with the incorrect price scenario:
In New Zealand, a consumer can’t force a shop to sell them goods which have been advertised at an incorrect price, but they can insist that they be compensated for their wasted trip to the shop.
Before the CPA came into effect in April 2011, the ombud said, a pricing mistake would not be binding on the supplier, as it would have been considered to be “an invitation to treat”, in other words, to buy.
Now, under the CPA, the displayed price has become a binding offer, which becomes a binding contract once accepted by a consumer making payment. That’s unless it’s an “inadvertent and obvious error” and the supplier takes those steps outlined in Section 23, to correct the mistake.
“Sections 23 and 30 appear to be contradictory with regard to errors, unless Section 23 is taken only to refer to displayed prices in the store and Section 30 is taken to refer to advertisements in the media/ online.
This is something only the Consumer Tribunal or the courts can pronounce on.”
This is just one in a very long list of scenarios which the act is not 100 percent clear on, alas.
The ombud’s conclusions, on surveying international law on this matter are:
l Suppliers are bound to provide goods at the lowest advertised or displayed prices – in other words, they bear the risk and costs associated with errors.
l In the case of displayed price errors, the supplier is bound until the consumer is informed. If the consumer acts in a manner consistent with buying the item – walking to the till with it, for example – prior to being informed of the error, the consumer is entitled to pay the “error” price.
l Suppliers can limit the extent of their risk by stipulating the number of items available at a given price or the period for which the offer is valid in adverts and by correcting the error and taking reasonable steps in the case of displayed prices.
What are reasonable steps? In the case of a displayed error, withdrawing the product from sale, correcting the price or label on shelf, and then making the product available for sale again.
In the case of an incorrect price being placed online, or in a newspaper advertisement, e-mail, SMS, catalogue or pamphlet: replacing the advert and re-advertising a notification alerting consumers to the error and correct price or notifying them via e-mail or SMS.
The ombud also suggested that suppliers put up notices at the affected stores and keep photographic proof of the notices, as well as a record of who put them up and when.
And here’s the bit I love, from the New Zealand example – the ombud suggests that stores compensate customers for wasted trips by means of cash or vouchers. Melville also suggested something to retailers, which would spare consumers everywhere a lot of effort and frustration over “wrong” prices: “Appoint a specific employee to be responsible to check for price errors in displays at regular intervals and advertisements before they are approved”.
Bottom line: although the CPA protects consumers and ensures that they know the total price that they are to be charged for the goods, and that the price is fair, it does not entitle consumers to an unfair price benefit or to take advantage of the supplier. - Pretoria News