Transcript Advertisment of Prices

México
Advertisement of prices:
the Mexican experience
International Consumer Protection and
Enforcement Network (ICPEN)
The Hague, Netherlands, April 2011
Index
• Introduction
• Legal framework
• Common Mexican “advertising of prices” practices
• Enforcement experiences
• Preventive actions
• Final considerations
Introduction
BACKGROUND
• Competition is necessary for well functioning markets.
• Fair marketing or price strategies may enhance
competition.
• On the other side, businesses and advertisers seem to
have similar behavior all around the world.
• In Mexico, as in other countries, there are pricing
strategies that can harm consumers interests.
• An adequate price framing allows consumers to asses the
value of the offer.
• An unfair price framing disturbs people’s perception of the
value of an offer.
The Hague, Netherlands, April 2011
Legal framework
LAW
• The Federal Consumer
Protection
Law
foresees general and
specific
dispositions
concerning advertising,
such as:
Chapter III “Information and
advertising”.
Chapter IV “Promotions and
offers”.
The Hague, Netherlands, April 2011
Legal framework
ADVERTISEMENT
• Article 32 of the FCPL
establishes
that
the
information
and
advertisement shall be:
Truthful
Verifiable
Exempt of text, dialogues,
sounds,
images,
trademarks, designation
of origin and other
descriptions that lead or
may lead to mistake or
confusion by being either
deceptive or unfair.
The Hague, Netherlands, April 2011
Legal framework
TOTAL AMOUNT VS DRIP PRICING
• Article 7 bis establishes “The supplier is bound to exhibit, in a
prominent manner, the total amount to be paid for the goods,
products, or services such supplier offers to consumers”.
• The total amount must include taxes, commissions, interest
rates, insurance, cost, or any additional charges that must be
paid because of buying… in credit or in cash operations.
• Principles:
Prices must include any additional charge.
Forbidden to apply “plus VAT”.
As concerns partial payments, not enough to mention price to pay,
must indicate total amount to be paid.
The Hague, Netherlands, April 2011
Legal framework
PROMOTIONS AND OFFERS VS BAITING SALES
• Article 48 establishes rules for promotions and offers as follows:
Clear indication of the following:
1. Conditions.
2. Period of time.
3. Said volume evidenced (volume of stock).
If volume and time of period are not evidenced, it is expected they
are unlimited.
Consumers meeting requirements, shall be entitled to acquired the
offer.
The Hague, Netherlands, April 2011
Practices: Total amount vs drip pricing
• Drip or partitioned
pricing
Deceptive
and
confuse
advertising
since
you
can
understand 3 different
prices.
“Applies a charge
because
of
the
expedition
of
the
electronic ticket of
USD $16 dollars, VAT
included”.
The Hague, Netherlands, April 2011
Practices: total amount vs drip pricing
Total amount
• Example with the total
amount to be paid,
including
additional
charges mentioned in the
restrictions.
“Includes a charge because of the
expedition of the electronic ticket of
USD $16 dollars, VAT included”. If it is
purchased in Aeromexico.com, it may
vary depending on where it is bought“.
The Hague, Netherlands, April 2011
Practices: total amount vs drip pricing
Total amount
Example of different possible plans to pay without mentioning the total
amount to be paid in each plan.
The Hague, Netherlands, April 2011
Practices
Examples clearly stating period of time, product and conditions
The Hague, Netherlands, April 2011
Practices
Example that
does
not
present
purchase
receipts
and
do not mention
vs who they
are comparing
prices.
The Hague, Netherlands, April 2011
Enforcement
GUIDELINES
• Profeco has as remit, the
possibility to issue guidelines to
verify the advertising and avoid
consumers to be mislead.
• Profeco published in the Official
Gazzette of the Federation, in
October 2009, Guidelines for
information
or
price
comparisons.
• Several conditions identified for
practicing
fair
price
comparisons.
The Hague, Netherlands, April 2011
Enforcement
BREACHES TO THE GUIDELINES
• When comparing prices, it is not
done with respect to goods of
the same brand, pattern,
presentation and content.
• Compared products, services
and packages are not identical.
• Purchase receipts are not
shown or mentioned.
• Purchase receipts are not from
the last five days.
• It does not include the legend:
“To date, the compared price
may have changed”.
TOOLS
• Corrective actions
Exhort: invitation to
modify publicity.
Requirements:
to
substantiate veracity.
Procedures regarding
law infringements.
The Hague, Netherlands, April 2011
Preventive actions
DIALOGUE WITH BUSINESES
• Good corporate image means clients
• A fair marketing campaign avoids legal action and
spending money in corrective actions
• Review promotional advertisement to stay
compliant with the law
• Free training to the private sector
COPY ADVICE (PREVIOUS REVISION)
• Authority to provide its legal opinion about
campaigns not in use yet.
The Hague, Netherlands, April 2011
Preventive actions
Before the Copy advice
The Hague, Netherlands, April 2011
Preventive actions
After the Copy advice
The Hague, Netherlands, April 2011
Final considerations
LESSONS LEARNT
• Fair pricing techniques avoids economic harm to
consumers.
• Strong and decisive actions against breaches,
serves to real equal conditions in competition.
• Bundling may cause “complex offers”, so special
attention should be given, in the future, to telecomm
sector.
• Good enforcement actions requires authorities to
analyze particular markets (e.g. telecoms).
The Hague, Netherlands, April 2011
México
Thank you for your attention!
The Hague, Netherlands, April 2011