Discount terminology used in marketing

(5/2020)

These guidelines provide instructions for companies on the implementation of discount sales, clearance sales, discounts, and various price comparisons for price comparisons for consumers.

The use of discount terminology communicates the affordability on a retailer’s own prices in relation to another price. It is important to specify during marketing, e.g. what a retailer is comparing their valid sales price or price level to.

Different discount terms and expression partly have common principles, but also their own special principles. As a rule, any type of price comparison is permitted, as long as it is neither untrue nor misleading.

The policy also includes tools to support the planning of marketing. The checklists included in the policy allow a company to ensure that the key principles related to the use of discount terms have been taken into account in marketing.

The Consumer Ombudsman considers the policy to be the starting point for the supervision of marketing. The policy is based on the Consumer Protection Act and the ruling practices of the Market Court, the Supreme Court, the Court of Justice of the European Union, and the Consumer Ombudsman.

Finnish legislation applies to the activities of a business operator located abroad if marketing is directed to Finland.

The Consumer Ombudsman has drawn up the policy together with the Finnish Commerce Federation. The Finnish Commerce Federation recommends compliance with the provided instructions.

Contents

  1. Design of an ad
  2. Use of various price-related terms simultaneously
  3. Highlighting a price advantage
  4. Discount sale
    4.1 General principles
    4.2 Restrictions on range for discount sales
    4.3 Specifying the sum of a discount
    4.4 Repetitive discount sales
    4.5 Checklist – How to succeed in the marketing of discount sales
  5. Clearance sales
    5.1 General principles
    5.2 Restrictions on range for clearance sales
    5.3 Checklist – How to succeed in the marketing of clearance sales
  6. Special offers
    6.1 General principles
    6.2 Limitations on special offers and false claims
    6.3 Bait and switch advertising
    6.4 Checklist – How to succeed in special offer marketing
  7. Other price-related terms
    7.1 Recommended retail price (RRP)
    7.2 Comparing to the general price level
    7.3 Competitor price comparison
    7.4 Normal price
    7.5 Price promise and price guarantee
    7.6 Outlets, factory stores, etc.
  8. Legislation and assessing whether something is misleading
    8.1 Provisions applicable to supervision
    8.2 Assessing whether something is misleading
    8.3 Practices prohibited under all circumstances
    8.4 Obligation to provide proof on factual claims

1. Design of an ad

The product picture, the reduced price and the expression that describes the discount (e.g. a discount percentage) must correspond with one another.

For example, products no included in in the scope of a special offer cannot usually be included in special offer marketing. If an advertisement contains products with a normal price in addition to special offer products, the special offer products must be clearly marked as separate from the products not included in the special offer.

It is essential that the image or overall impression created by the advertisement for the consumer is in line with reality.

  • If price information includes a measurable factor for the consumer’s purchasing behaviour, it is a factual claim that the retailer must be able to prove. If, for example, a retailer claims that products from a store are being sold at a 50% discount or products from a store are always cheaper than those of competitors, the company must ensure the accuracy of the claim concerning the affordability of its prices. If the company is unable to show that its claim is true, this is a case of misleading information referred to in chapter 2, section 6  of the Consumer Protection Act.
  • If the claim only concerns general praise, which the consumer is not expected to understand literally, it is a case of commercial praise. If the claim is so general in nature that the consumer does not consider it a factual claim, the company does not need to provide evidence. For example, most beautiful, most luxurious, most delicious are most often considered commercial praise and matters of taste, in which the expectations are also influenced by the customer’s personal preferences.

When selecting a marketing channel, the seller must ensure that in spite of the space or time limitations (TV, radio, banners, social media channels, etc.), the advertisement gives a correct picture of, for example, the usability and limitations of the offer.

Special offers for frequent customers must stand out as separate from special offers that are intended for all shoppers. In order to ensure accurate rules for frequent customer marketing the Finnish Consumer Ombudsman’s has prepared a policy on frequent customer marketing.

2. Use of various discount terms simultaneously

Marketing practices that apply to discount sales, clearance sales, and special offers can be used for various products parallel with one another, or consecutively, as long as marketing does not become such that it misleads consumers. (MAO:654/09 and MAO:655/09).

For example, a specific product group can be advertised with discounts when another product group is simultaneously marketed as a special offer, there is a clearance sale for a third product group  and the prices of a fourth product group are compared with the prices charged by a competitor for similar products.

The advantage a consumer gains from a discount must be real. Marketing can become misleading, for example, if discount campaigns that are valid for a fixed period of time or apply toa specific product group consistently have the same products and, in practice, the products are not sold at prices higher than the discounted prices.

3. Highlighting a price advantage

Marketing can emphasise the price advantage offered to consumers. The marketing of a particularly large price advantage can become misleading if the price advantage actually only applies to a small share of products, such as those covered by discount sales. 

For example, a claim of an ‘up to 70% discount’ can be considered misleading if the company is unable to guarantee that the consumer has access to the product at a reduced price (Commission Staff Working Document, section 3.3.1. ”General misleading information”, SWD(2016) 163 final).

Marketing is misleading, for example, if:

  • the reduced price is advertised as “up to 70% DISCOUNT”, where the term “up to” is printed in very small letters, and most of the products included in the discount sale have a much lower discount percentage.
  • the business operator is unable to prove that consumers on average have access to the maximum discount marketed.
  • the marketing presents benefits or savings claims, but fails to mention the terms or limitations related to receiving the discount.

4. Discount sales

4.1 General principles

A discount sale is a limited-time offer with the content of which is a discount on a product sold by the company. Discount sales are expressed in Finland with the term “ALE”.

The term discount sale cannot be used to describe the affordability of the company’s prices in relation to competitors or the overall price level, as the comparison prices must be based on the original prices of the company marketing the discount sale.

Drawing a line between a discount sale and a special offer is not always clear cut if a campaign is not specifically called a discount sale. A discount sale differs from a special offer in that

  • a smaller number of products are usually special offers than discounts during a sale.
  • a special offer is usually valid for a shorter period of time than a discount sale.
  • a special offer price reductions or special affordability is usually smaller that discounts during discount sales.

4.2 Restrictions on range for discount sales

Discount sales may include a store’s entire range or only part of the range.

If products included in the discount sale are not limited or specified in the marketing, a significant share of the store’s product range must be covered by the discount sale.

If a discount sale is limited to a certain part of a store’s range, the products or product groups that are covered by the sale must be clearly stated in the advertisement so that the consumer can find the products included in the discount sale.

4.3 Specifying the sum of a discount

The premise of a discount sale must be the price normally charged by the company in question before the price is reduced.

A discount must be calculated from the price the consumer has been able to purchase the produced for from the marketed place of sale prior to the discount sale. A low price level alone cannot be marketed as a discount sale.

The price of the product may not be declared as reduced, if the price has not actually been reduced and the price advantage obtained by the consumer is not real.

Example 1. Misleading marketing, comparison price, actual price advantage

A comparison price had been used in connection with sales prices in the marketing of sofa furniture for a period of approximately two years. According to the company, the comparison prices were so-called normal prices, i.e. prices previously charged by the company for the product. As the company was not able to prove that it had ever charged the comparison price for the products, the Market Court found that the marketing was misleading to consumers and, thus, in violation of chapter 2, section 6 of the Consumer Protection Act. (MAO:655/09)

Example 2. Misleading marketing, comparison price, actual price advantage

The marketing of sports equipment included terms referring to comparison prices and reduced prices such as “Discount -20%” and “Save EUR 40,00!”. According to the company, the comparison prices had been prices at which the products had been originally obtained for sale by the company. By using the comparison price, the consumer was led to believe that this was a cheap new sales price. The marketing proved to be misleading because the company was not able to demonstrate that it had previously charged the specified comparison price for the products. As this was not a real price advantage, the Market Court found that the company had given misleading information and, thus, acted in violation of chapter 2, section 6 of the Consumer Protection Act. (MAO:159/19)

Example 3. Misleading marketing, actual price advantage

The term ‘ALE’ (discount sale) had been used in the marketing of furniture for certain products, for example during the period 28 December 2016 – 7 February 2017. However, the use of the term “ALE” (discount sale) did not influence the sales price charged from consumers. Instead, the products were sold prior to the sale, during the sale and after the sale for the same sales price. In its decision, the Market Court found that the company had acted inappropriately with regard to consumers by using the term ‘ALE’ (discount sale) or similar in connection with the sales price of the product when the product had been sold at a price that was not lower than before. The practice in question was in violation of chapter 2, section 6 and section 3 of the Consumer Protection Act. (MAO:656/18)

Example 4. Permitted marketing, actual price advantage, duration

The marketing of women’s summer running shoes used a strikethrough comparison price for nine months in connection with the sales price from summer to spring of the following year. No other terms referring to the reduced price were used. Before the sale, the running shoes had been sold at a comparison price for a couple of months. According to the Market Court, the discount sale involved the marketing of seasonal products after their main sales period. The sales price together with the comparison price showed the price advantage the consumer received, which was relevant information for the consumer. According to the Market Court, the low sales price was a real price advantage, and marketing was not misleading within the meaning of chapter 2, section 3  or section 6 of the Consumer Protection Act. (MAO:160/19)

4.4 Repetitive discount sales

Marketing becomes misleading, as repetitive discount sales blur the consumer’s perception of the normal level of prices at the place of sale and the actual advantage gained from the discount.

Example 1. Misleading marketing, authenticity of the discount

A company marketed sofa furniture for approximately two and a half years with various campaigns. According to the company, the campaigns involved discount sales, special offers and clearance sales. The campaign nature of the store’s marketing and the resulting perception of a constant change to prices did not indicate that the company’s overall price level was affordable, but rather blurred the idea of a normal price level. Terms and expressions referring to reduced price and the repetitiveness of the same type of marketing gave the impression of discount sale marketing. According to the Market Court, the company’s marketing of was likely to obscure the consumer’s understanding of the company’s normal price level and, thus, the real price advantage resulting from the discount. This marketing campaign was found to have misled consumers. (MAO:654/09, See also MAO:655/09)

Example 2. Misleading marketing, authenticity of the discount

A company that sells convenience goods, hardware products and leisure time products has regularly used the term “ALE” (discount sale) in its printed ads as well as other terms and expressions referring to reduced prices. The used price-related terminology gave the impression that there was a discount sale at the store. The Market Court found that the company had provided misleading information and acted inappropriately in using terms referring to a reduced price while the products were not sold at prices below what they had been previously. (MAO:204/04)

4.5 Checklist – How to succeed in the marketing of discount sales

The checklist is intended to function as a tool that supports the planning and implementation of marketing.

The checklist allows the company to ensure that the key principles related to the use of discount terms have been taken into account in marketing. The list helps the company take into account the principles related to discount terms and avoid the use of misleading or false discount terms.

However, the checklist is not intended to be absolute. As a rule, any type of price comparison is permitted, as long as it is neither untrue nor misleading.

Marketing can also deviate from the instructions in the checklist on a case-by-case basis.  For example, the acceptable duration of discount sales may vary to some extent by sector and product, such as seasonal products. In this case, it is worth carefully assessing the implementation of marketing in advance in accordance with the principles of this policy.

Make sure that at least these things are in accordance in the marketing of a discount sale.

  • A discount sale is a reduction in the sales prices of a retailer’s own marketplace.
  • The discount is calculated from the sales price previously charged at the place of sale.
  • Product prices have been reduced by at least 10%.
  • The discount sale lasts no more than 2 months consecutively.
  • The discount sale lasts no more than 3 months over the entire calendar year.
  • Any restrictions related to the discount sale must be clearly stated.
  • The retailer must be able to justify the authenticity of the discount afterwards.

5. Clearance sale

5.1 General principles

Terms comparable to clearance sales include closing sales and moving sales.

Clearance sales can be based, for example, on the closing down of a marketplace or giving up a particular product group or model, in which case the purpose is to get rid of the stock of a product group or model that is to be eliminated from the retailer’s range.

Using the claim that a company is moving or terminating its business activities is forbidden if the claim is false. Other forbidden expressions include such claims as “end of lease”” and “Selling entire stock”, if the company is not moving, terminating its business activities or the stock is not about to run out. (Section 1, paragraph 13 of Government Decree 601/2008)

Retailers are also forbidden from using pricing terms related to the clearance sale of individual products or product groups, if the purpose of the campaign is not authentically to terminate the sale of the product marketed as clearance sale stock.

Example 1. Misleading marketing, false clearance sale

The furniture company had marketed furniture with campaigns titled “Final free fall”, “Factory emptying”, “Factory clearance at factory prices”, “Everything out fast”, “Sofas at clearance price”, “We are removing models. “Clearance batches”, “clearance sale”. “4 day must sell all” and “Range overhaul!” Giant sell out! Everything has to go! The Market Court found that the campaigns were not about clearance sales, as the various clearance and sell out campaigns clearly did not mean that even the sale of the specifically marketed couch models would have been terminated, at least as a rule, after these campaigns. (MAO:654/09)

5.2 Restrictions on range of products during clearance sales

During a clearance sale, a significant share of the marketplace’s range must be on sale at a reduced price, if the content of the clearance sale has not been limited or otherwise specified in marketing.

If the clearance sale is limited to a certain part of the retailer’s product range,

  • the products or product groups in the scope of the clearance sale must be stated clearly in marketing.
  • the products sold at reduced prices must be marked clearly or separated from the products in the store that are not within the scope of the clearance sale.

5.3 Checklist – How to succeed in the marketing of clearance sales

The checklist is intended to function as a tool that supports the planning and implementation of marketing.

The checklist allows the company to ensure that the key principles related to the use of discount terms have been taken into account in marketing. The list helps the company take into account the principles related to discount terms and avoid the use of misleading or false discount terms.

However, the checklist is not intended to be absolute. As a rule, any type of price comparison is permitted, as long as it is neither untrue nor misleading.

Marketing can also deviate from the instructions in the checklist on a case-by-case basis. In this case, it is worth carefully assessing the implementation of marketing in advance in accordance with the principles of this policy.

Make sure that at least these things are in accordance in the marketing of a clearance sale.

  • A clearance sale involves the termination of a certain product’s sale or the closing down of a place of sale.
  • The discount is calculated from the sales price previously charged at the place of sale.
  • Product prices have been reduced by at least 10%.
  • Clearance sales for individual products or groups of products can be no longer in duration than 2 months.
  • A clearance sale for an entire company can be no longer in duration than 6 months.
  • Any restrictions related to the clearance sale must be clearly stated.
  • A retailer must be able to justify a clearance sale after it has ended.

6. Special offers

6.1 General principles

A special offer is a short-term price reduction on a certain product or product group or, e.g., an especially low price in comparison to the general price level.

The following principles shall be taken into account in the pricing of the special offer:

  • If the product marketed as a special offer has previously been part of the retailer’s product range, the special offer price must be lower than the price the retailer has previously charged for the same product.
  • If the product marketed as a special offer has not previously been part of the retailer’s product range, the special offer price must be clearly lower than the company’s future sales price for the same product (e.g. an opening offer or introductory offer).
  • If the product that is marketed as a special offer has not previously been in the seller’s range of products and is only available for sale for the duration of the offer, its affordability must be justified. A special offer price can be justified, for example, by stating that the product was acquired for the purpose of the special offer, and its sales price is especially low compared to the prices charged by competitors.

Drawing a line between a special offer and a discount sale is not always clear cut if a campaign is not specifically called a discount sale. A special offer differs from a discount sale in that

  • a smaller number of products are usually special offers than discounts during a sale.
  • a special offer is usually valid for a shorter period of time than a discount sale.
  • a special offer price reductions or special affordability is usually smaller that discounts during discount sales.

6.2 Limitations on special offers and false claims

Products or product groups that are marketed as special offers must be identified and the duration of the marketed special offer must be visible on the marketing.  If this is not done, there is a risk that the consumer looking at the advertisement may think that the advertisement is for a discount sale. (MAO:654/09 and MAO:655/09).

Special offer products must be available to consumers for the entire special offer period. The marketing must provide clear information to consumers on the time period during which time, with what actions or other conditions they can get the special offer product or other benefit.

  • A reservation such as “limited stock” can only be used when the retailer has a small number of items available and these are likely to sell out quickly.

    If products that are marketed as special offers are available in such small numbers that they are likely to run out while the offer is still valid, the marketing should mention the number of items on offer so that the consumer will have the possibility of estimating the duration of the offer. Otherwise, there is a risk that marketing creates a misleading impression of the availability of the marketed advantage.

  • Expressions such as “limited stocks” or “as long as stocks last” cannot be used as general conditions that apply to all discount advertising. These expressions do not allow the consumer to determine the time period during which they can get the discounted product or the marketed benefit.
  • Place of business-related restriction on the availability of the special offer must be included clearly in any marketing

Marketing may not include false claims according to which the product is only available for a very limited period or, under certain conditions, for a very limited period of time for the express purpose of baiting the consumer into making the purchase decision immediately. (Section 1, paragraph 6 of Government Decree 601/2008)

Example 1. Misleading marketing, continuous special offer, false claim

Percentage-terms and comparison prices that typically refer to reduced prices and which create the impression of reduced priced were used in the marketing of winter sports equipment. The terms used in advertisements concerning the duration of the special offers gave the impression that the goods were offered at a certain reduced price for only a period of one week. When the marketing that had promised the same fixed-term offer had been repeated for several weeks for the same product, the Market Court stated in its decision that this was a case of a false claim under Government Decree (601/2008). (MAO:829/15)

Example 2. Misleading marketing, continuous special offer, false claim

The price and discount terms used in the marketing of furniture and the terms concerning the time limit of special offers gave the impression that the goods were only available at a reduced price for a very limited period of time at a time. As this special offer marketing for the same product was repeated fairly soon and repeatedly after the limited time campaign, the Market Court found in its decision that this was a case of a false claim under the Decree (601/2008). (MAO:385/16)

6.3 Bait and switch

Bait and switch advertising is the “baiting” of consumers to a place with exceptionally small shipments and the marketing is an intentionally excessive and strong means of marketing compared to the amount of products available.

Retailers are prohibited from using their marketing to encourage consumers to purchase consumer products for a certain price, if the business operators has reason to believe that taking into consideration the quality, price or scope of marketing of the goods, the goods cannot be supplied to consumers at the offered price in a reasonable period of time or in a reasonable amount. (Section 1, paragraph 4 of Government Decree 601/2008)

6.4 Checklist – How to succeed in special offer marketing

The checklist is intended to function as a tool that supports the planning and implementation of marketing.

The checklist allows the company to ensure that the key principles related to the use of discount terms have been taken into account in marketing. The list helps the company take into account the principles related to discount terms and avoid the use of misleading or false discount terms.

However, the checklist is not intended to be absolute. As a rule, any type of price comparison is permitted, as long as it is neither untrue nor misleading.

Marketing can also deviate from the instructions in the checklist on a case-by-case basis.  In this case, it is worth carefully assessing the implementation of marketing in advance in accordance with the principles of this policy.

Make sure that at least these things are in accordance in the marketing of a special offer.

  • A special offer involves the reduction of a retailer’s own sales price or the provision of another benefit.
  • The discount has been calculated from the price previously charged at the place of sale or offered benefit is otherwise justified.
  • The special offer on the product will be valid for at most a period of one month.
  • Special offers for the same product are not repeated in succession.
  • The product is available, or the special offer can be utilised throughout the special offer period.
  • Any restrictions related to the special offer must be clearly stated.

7. Other price-related expressions

7.1 Recommended retail price (RRP)

The recommended retail price is the price at which the manufacturer or other supply chain party recommends retail shops to sell the product at. It is not the company’s own previous sales price or the normal price.

Retailers are not prohibited from comparing their sales price to the recommended retail price, the acceptability of this comparison is subject to conditions. First of all, the recommended retail price compared to the sales price must be genuine and up-to-date. In addition, the recommended retail price must correspond with the general sales price of the product on the market. However, effective competition usually leads to consumer products not being commonly sold at retail prices. For this reason, comparing a retailer’s own sales price to the recommended retail price is generally not possible without the marketing becoming misleading.

Comparing a retailer’s own sales price to the recommended retail price easily becomes an illusion and in violation of the Consumer Protection Act – for example, if a company uses high recommended retail prices in its marketing in connection with the sales price to create the impression of a significant discount for the consumer. (European Commission guideline section 3.3.1 ”General misleading information”, SWD(2016) 163 final).

7.2 Comparing to the general price level

When a retailer compares its own sales price to a recommended retail price, it is a question of comparing the retailer’s own price to the general price level. A retailer’s sales price cannot be compared to the recommended retail price in order to highlight the discount on the sales price, because it is not a question of offering a discount on its own previous sales price.

When assessing the misleading nature of the price comparison, it is usually determined whether the recommended retail price corresponds with the general market price of the product and/or whether the price has been used on the market for a considerable period of time. (MAO:829/15, MAO:656/18 and MAO:159/19). A retailer cannot compare its own sales price with the product’s recommended retail price if consumers are not in reality charged the product’s recommended retail price in other retail stores.

Example 1. Misleading marketing, comparison to the recommended retail price

Percentage-terms referring to reduced prices and comparison prices were used in the marketing of winter sports equipment. According to the company, the comparison prices were based on the recommended retail prices reported by importers or suppliers. When it was revealed that the sector typically sells products at prices lower than the recommended or guideline retail prices, the Market Court ruled that the company had provided misleading information on the actual affordability of its prices and acted in violation of chapter 2, section 3 and section 6 of the Consumer Protection Act. (MAO:829/15)

Example 2. Misleading marketing, comparison to the recommended retail price

Terms related to reduced prices and comparison prices were used in the marketing of furniture. According to the company, the comparison prices were based on the recommended retail prices given by suppliers. Although the company was able to demonstrate that the comparison price for some of the furniture was genuinely based on the recommended retail prices established by the manufacturer, it was not able to demonstrate that the comparison prices were in line with the overall market price. According to the Market Court’s decision, the company’s practice had given the average consumer misleading information about the actual low pricing of the company. The company has acted in incompliance with chapter 2, section 6 and section 3 of the Consumer Protection Act. (MAO:656/18)

Example 3. Misleading marketing, comparison to the recommended retail price

The marketing of sports equipment included terms referring to comparison prices and reduced prices such as “Discount -20%” and “Save EUR 40,00!”. According to the company, the comparison prices were based on the recommended retail prices reported by importers or suppliers. The marketing proved to be misleading because the company did not prove that the comparison price was based on the recommended or guideline retail price indicated by the importer or supplier, which would generally correspond to the price charged by other retailers for the products.As this was not a real price advantage, the Market Court ruled that the company had given misleading information and thus acted in violation of chapter 2, section 6 of the Consumer Protection Act. (MAO:159/19)

A retailer cannot claim that its products are more affordable than those of its competitors, if the products in question are not even available (MAO:350/18).

7.3 Competitor price comparison

A company can compare its own sales price to the price of one or more competitors.

The comparison price may give rise to a misleading impression of the affordability of the marketed product and of the real benefit to the consumer,

  • if the comparison price is not based on a sufficiently representative sample of competitors’ prices.
  • if the comparison price is not based on sufficiently current determination of competitors’ prices. Information on competitors’ prices may become out of date very quickly depending on the current competitive situation. (MAO:549/10)

Marketing may become misleading if the company is unable to give grounds for and prove the accuracy of the comparison price or general price comparison.

Example 1. Misleading marketing, actual price advantage

The marketing of sports equipment included terms referring to comparison prices and reduced prices such as “Discount -20%” and “Save EUR 40,00!”. According to the company, the comparison prices were based on the price charged by competitors for the corresponding product. By using the comparison price, it was implied to consumers that the sales price was inexpensive, which proved to be misleading, because the company was unable to prove that the comparison price was based on a price charged by competitors for a similar product. As this was not a real price advantage, the Market Court ruled that the company had given misleading information and thus acted in violation of chapter 2, section 6 of the Consumer Protection Act. (MAO:159/19)

Example 2. Misleading marketing, actual price advantage

The term “VAST.-hinnat” was used in the marketing of outdoors and hiking clothing. “VAST.-hinnat” referred to the prices charged by competitors for the same or similar product. In its decision (MAO:549/10), the Market Court found that the company was not able to fully justify and prove that the comparison prices, i.e. ”VAST.-hinnat” were correct. The consumer was given a misleading impression of the relative affordability of these products and the amount of benefit they would receive. The company has thus acted in violation of chapter 2, section 3 and section 6 of the Consumer Protection Act.

Example 3. Misleading marketing, generalisation of price comparison

In its ruling, the European Court of Justice, the business operator had generally claimed that his price level was lower than that of their main competitors (CJEU C-356/04). This type of marketing may be misleading in nature if the advertisement does not indicate that the comparison is not based on all the advertiser’s products. In this case, the consumer may be mistaken about the savings they obtained, regardless of the goods they bought from the advertiser. The consumer may also falsely believe that, for example, all the goods of the advertiser are without exception cheaper than those of the competitors (KKO:2017:83).

7.4 Normal price

Normal price refers to the price previously charged for the same product at the same place of sale, if the marketing does not specify what other price is referred to by the term normal price.

Consumers must not be misled with claims of low prices when selling products at normal prices. For example, misleading advertising may be caused by the use of the same or similar advertisements or price terminology in the marketing of products with normal prices as has previously been used in the advertising of special offers.

7.5 Price promise and price guarantee

What is meant by a price promise, price guarantee or other similar claim depends on what kind of claims the company makes in its marketing and what conditions it has set for the promise or guarantee.

A price promise or price guarantee often refers to a claim made by a company in its marketing that the company is the most affordable in its field or seeks to be the most affordable. A promise or guarantee combined with a claim of inexpensive prices requires that the consumer finds the marketed product at a cheaper price from another company within the scope of the promise or guarantee.

Marketing becomes misleading if marketing concerning the company’s price promise or guarantee creates an untrue impression of the company as the most inexpensive player in the industry. Marketing can be misleading in cases where a company has not investigated its competitors’ prices at all or the report on competitors’ prices is based on comparative material that is too narrow in scope or information that is out of date.

Example 1. Misleading marketing, factual statement, burden of proof

A company had described in pricing in marketing titled a price promise with a claim that it aims to always be the most affordable option in the market. It also claimed in its marketing that it continuously followed market prices and lowered its prices if it noted that it was not inexpensive enough. The marketing promised to compensate consumers for the difference in price if they found the product, they had purchased at a lower price somewhere else. In its decision KKO:2017:83, Finland’s Supreme Court found that the wording used in the company’s advertisement was not decisive, but rather the impression that the average consumer gets when they read the advertisement in a normal manner. The price promise and all its texts were likely to give consumers the impression that the company was the cheapest operator. Information provided on price is a key, measurable factor for the consumer’s behaviour. The claim presented by the company did not only concern general praise but also a factual claim by the company that its prices were cheaper that the company had to prove.

Example 2. Misleading marketing, factual statement, burden of proof

In its decision (MAO:350/18), the Market Court found that to the extent that the company had not been able to prove the truthfulness of the claim included in its price promise in marketing that it had the lowest prices, the company had presented misleading information in its advertise that is prohibited in chapter 2, section 6 of the Consumer Protection Act. However , to the extent that the company presented a sufficient and reliable explanation that other operators had only exceptionally and temporarily charged lower prices for the same or similar products than the company itself, the Market Court found its marketing could not be considered misleading from the perspective of the average consumer.

7.6 Outlets, factory stores, etc.

Outlets, factory stores and other similar stores are subject to the same regulations and principles as all other retailers.

The consumer must not be misled with regard to the affordability of the price. Misleading of the consumer can result from the marketing of products giving the consumer the impression of a discount sale, although the product has not previously been sold at a higher price at the place of sale.

Please note:

  • Outlets or factory outlet advertising may not use terms referring to discount sales if marketing does not refer to a reduction of prices at the same marketplace.

8. Legislation and assessing whether something is misleading

8.1 Provisions applicable to supervision

Marketing to consumers concerning the affordability of products with different price advantages, price promises or price comparisons is covered by the provisions in chapter 2  of the Consumer Protection Act (1978/38).

Under chapter 2, section 6, subsection 1 of the Consumer Protection Act, a company cannot provide information that is false or is misleading in its marketing or in customer relations if the information will likely lead to the consumer making a purchase decision or a decision that is otherwise connected with a consumer product, which they would not have made without the information in question. Under subsection 2, paragraph 3  misleading information may in particular concern the price of the consumer product or the grounds for determining it, a special price advantage and terms of payment.

Chapter 2 of the Consumer Protection Act implements Directive 2005/29/EC of the European Parliament and of the Council on unfair commercial practices.

  • The directive harmonises the European community’s rules on marketing and commercial practices which may harm consumers’ financial interests
  • Annex 1 of the Directive, lists all the practices that are prohibited under all circumstances (the so-called blacklist)

8.2 Assessment of whether marketing is misleading

Whether marketing is possibly misleading is assessed from the perspective of an average consumer. In this case, the wording used in an advertisement is not decisive, but rather the impression that forms in the mind of an average consumer when they read the advertisement in the manner they usually read advertisements. (KKO:2017:83)

The practices of a business operator are considered misleading.

  • if marketing contains incorrect information and is false
  • If marketing in any manner deceives the average consumer

Even if the information provided in marketing is completely correct, marketing is misleading if it will like lead to the consumer making a commercial decision that they would not have made otherwise.

Factually, error-free information can be misleading, for example because of the way it is presented. In EU Court of Justice case (C-611/14), the court found that the information presented may, by reason of its way of presentation, lead to a misunderstanding as a whole, for example, when one specific point is highlighted and another piece of information is omitted or presented in a more subtle manner. (KKO:2017:83)

When the misleading nature of marketing is assessed, the possible time and space limitations related to the means of communication is not taken into account. (Chapter 2, section 6 of the Consumer Protection Act)

8.3 Practices prohibited under all circumstances

Government Decree (601/2008) issued under the provisions laid down in chapter 2, section 15, paragraph 3 of the Consumer Protection Act lists the practices by business operators that are unfair commercial practices.

The practices listed in the Decree are always considered contrary to the Consumer Protection Act without assessing the possible impact of the practice on the economic behaviour of the average consumer.  Such practices include false clearance sales (paragraph 13), continuous unfair special offers (paragraph 6) and bait and switch (paragraph 4).

8.4 Obligation to provide proof on factual claims

Business operators must be able to prove that the factual claims related to their commercial practices are true. Examples of such claims include:

  • claims on the reduction of a price and the size of a discount.
  • claims about the affordability of the price charged by the business operation in relation to their competitors’ prices.
  • claims about competitors’ prices.
  • claims about recommended retail prices or the general price levels on the market.

In the absence of evidence or if the provided evidence is inadequate, the facts contained in the claims are considered to be incorrect. (DIR. 2005/29/EC Article 12, section a)