‘Was/now’ prices: Fake discounts are no longer allowed
From 1 January 2023, the Dutch Authority for Consumers & Markets will enforce stricter rules on discounting by Dutch companies. What can we expect?
Sandwiched between Black Friday and Christmas shopping, now is a good time to reflect on the prices we are paying. Chances are that many of us who contribute to consumerism as we indulge in (online) shopping sprees, have unknowingly encountered a price that was the result of a ‘fake discount’. In the past, some companies would raise the price of a product right before they were planning on marking down the product price. For example, a company would raise the price of product A from 30 to 50 euros, two weeks before Black Friday. On Black Friday, it would present consumers with a special deal, offering 45 percent off. Consumers end up paying 27.50 euros for a product that was originally 30 euros, before the company raised it temporarily to 50 euros. Consumers are then under the impression they got a remarkable deal, while in fact the difference is minimal. Alternatively, and quite ethically questionable, companies can also fabricate a fictitious ‘before’ price.
From 1 January 2023, however, the use of fake discounts is no longer allowed in the Netherlands. Earlier this year, the Ministry of Economic Affairs and Climate announced that a prohibition on said fake discounts was on its way. This set of new rules flows from a broader revision of Dutch consumer protection law, as a result of the Omnibus Directive (EU 2019/2161). The advent of these rules was announced almost a year before the actual implementation, which gave companies some time to grow accustomed to them and change their practices accordingly. The Dutch Authority for Consumers & Markets (ACM) has stated that they will carry out strict enforcement in 2023 straight away.
Dutch companies looking to discount a product, must use the lowest price that was charged over a 30-day period prior to the discount. Therefore, they cannot raise the price right before a promotional period, to create the impression of a large discount. There are exceptions: discounts on perishable products and products that have been on the market for less than 30 days (then the lowest price during the period that the product has been on the market counts) as well as progressive discounts (a product that is marked down 30 percent and then 50 percent, no longer than three months) are still allowed.
The main aim of the prohibition of fake discounts is to prevent traders from fluctuating prices, misleading consumers and presenting them with fake discounts. Ideally, combined with stricter enforcement by the ACM, this will lead to greater transparency and better consumer protection. The prohibition of fake discounts is part of the overarching aim of higher transparency and increased consumer protection, especially in online environments, that flows from the Omnibus Directive. It remains to be seen whether detecting fake discounts in practice is as effective as we hope, or that the announcement of the upcoming prohibition back in May has given companies plenty of time to start exploring more covert methods to advertise discounts.
As we are approaching Christmas, about two weeks before the ACM will start actively protecting us against fake discounts, keep in mind the responsibility that you have as a consumer to be alert and to educate yourself on marketing tactics used by companies. The numbers don’t lie: a market study in the UK found that a striking 99.5 percent of Black Friday deals could be bought at cheaper or similar prices at other times of the year. Before parting with your hard-earned money, compare prices and check the pricing history of products that you are looking to purchase. Be wary of advertising that tries to trigger a sense of scarcity or urgency, as such tactics play on our often limited consumer rationality.