In the fast-paced world of retail and hospitality, pricing errors are inevitable. Whether it’s due to human error, technical glitches, or incorrect information, mispricing can lead to significant issues. Here’s what you need to know and can do if you find yourself in this situation.
Understanding Your Legal Position
Contract Law and Pricing Errors
Under contract law, a displayed price is considered an “invitation to treat,” not an offer. This means that the price shown invites customers to make an offer to buy at that price, which the retailer can then accept or reject. Therefore, if a pricing error occurs, you are generally not obligated to sell the item at the incorrect price unless a contract has been formed, which typically happens when an order is accepted and processed.
Online vs. In-Store
- In-Store: If a pricing mistake occurs in-store, you can legally refuse the sale at the incorrect price. Inform the customer of the mistake, correct the price, and proceed with the sale at the correct price if the customer still wishes to purchase.
- Online: The situation can be more complex. Many online retailers include terms and conditions stating that a contract is only formed when the item is dispatched, not when the order is placed. This gives you the right to cancel orders made at incorrect prices before dispatching the goods.
Steps to Take When a Pricing Error Occurs
Immediate Action:
- Identify the Error: As soon as you notice a pricing error, remove the item from sale (either from the shelf or online) to prevent further sales at the incorrect price.
- Correct the Price: Update the price in your system and ensure it reflects accurately in all places where the product is listed.
Communication:
- Notify Customers: If customers have already attempted to purchase the mispriced item, communicate the error promptly. Apologize for the mistake, explain the situation, and offer the correct price.
- Offer Alternatives: Consider offering a discount or a small goodwill gesture as a token of appreciation for their understanding, especially if the error has caused significant inconvenience.
Review and Update Policies:
- Clear Terms and Conditions: Ensure your terms and conditions clearly state when a contract is formed and your policies regarding pricing errors. This can protect you legally and clarify the process for customers.
- Training Staff: Train your staff to handle pricing errors efficiently and professionally, ensuring they know how to communicate with customers about such issues.
Leverage Technology:
- Automated Price Checks: Use software to regularly audit your pricing across all platforms to catch errors quickly.
- Error Alerts: Implement systems that alert you to significant price changes or anomalies that could indicate an error.
Examples and Insights
Retailers like John Lewis and Amazon have faced significant pricing errors but managed them by swiftly canceling incorrect orders and communicating clearly with customers. For instance, John Lewis canceled orders for a £2,600 sofa mistakenly priced at £100, issuing automatic refunds without dispatching the items. In some cases, retailers have honored the incorrect prices due to customer backlash or as a goodwill gesture, like Marks & Spencer, which eventually honored orders for mispriced TVs after significant customer pressure and a petition (LoveMoney).
By understanding the legal framework, acting swiftly, and maintaining clear communication with customers, you can manage pricing errors effectively and maintain customer trust.
For more detailed information, you can refer to articles on LoveMoney and Citizens Advice.