SENATE, No. 648

STATE OF NEW JERSEY

INTRODUCED FEBRUARY 5, 1996

By Senator CIESLA

An Act concerning the advertisement of former or comparison prices of goods and supplementing P.L.1960, c.39 (C.56:8-1 et seq.)

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. This act shall be known and may be cited as the "Truth in Pricing Act."

    2. The Legislature finds and declares that price comparison advertising is a form of advertising commonly used in the sale or offering for sale of consumer merchandise by which current prices are compared with former prices or other stated values to demonstrate price reductions or cost savings. Price comparisons which accurately reflect values in the advertising merchant's trade area provide consumers with useful information in making value comparisons and purchasing decisions. However, price comparisons based on arbitrary or inflated prices or values serve only to deceive consumers and to give the advertising merchant an unfair competitive advantage over its competitors. Further abuse occurs when advertising merchants fail to disclose material information essential to consumer understanding of the comparisons made. The use of arbitrary or inflated price comparisons as an inducement to the sale of consumer merchandise injures both the consuming public and competition, and is an unfair trade practice and an unfair method of competition.

    3. As used in this act:

    "Advertise" or "cause to be advertised" means any attempt, other than by use of a price tag, catalogue or any offering for sale of a motor vehicle, to induce directly or indirectly the purchase or rental of merchandise at retail, appearing in any newspaper, magazine, periodical, circular, in-store or out-of-store sign or other written matter placed before the consuming public, or in any radio or television broadcast.

    "Merchandise" means any objects, wares, merchandise, commodities, services or anything offered directly or indirectly to the public for sale or rental at retail.

    "Person" means a natural person, firm, partnership, association, corporation, or agent or employer thereof.

    "Trade area" means the geographical area in which a person solicits or makes a substantial volume of sales of merchandise.

    4. It shall be an unlawful practice for any person to advertise or cause to be advertised a comparison price which is based upon or refers to another merchant's price unless:

    a. the person can substantiate through documents or other reasonable proof that the comparison price is the price offered for sale by that other merchant in the trade area during the 60 days prior to the effective date of the advertisement for merchandise of substantially the same kind and quality; and

    b. a clear and conspicuous disclosure is made in the advertisement that the comparison price is that other merchant's price, and not the person's own price.

    5. It shall be an unlawful practice for any person to advertise or cause to be advertised a former price of any merchandise unless:

    a. the former price is equal to or exceeds the price at which a substantial volume of sales was made in the 60 days prior to or 60 days subsequent to the effective date of the advertisement; or

    b. the former price was the price at which the advertised merchandise, or merchandise of substantially the same kind, quality or quantity, was openly and actively offered for sale in the 60 days prior to or the 60 days subsequent to the effective date of the advertisement; or

    c. the former price is based on a mark-up that does not exceed the supplier's cost plus the usual and customary mark-up used by the advertising merchant in the actual sale of the advertised merchandise, or merchandise of substantially the same kind, quality or quantity, in the recent regular course of business.

    6. It shall be an unlawful practice for any person to advertise or cause to be advertised a former or comparison price in terms of:

    a. "market value," "valued at" or words of similar import, unless that price is the price at which the merchandise, or merchandise of substantially the same kind, quality or quantity, is offered for sale by a reasonable number of merchants in the trade area;

    b. "suggested retail price," "inventory price," "invoice price," or similar terms that directly or indirectly compare or suggest the comparison between the cost of supply and the price at retail for the advertised merchandise.

    7. A competitor within the trade area of any person violating this act may bring an action to enjoin the continuance of the violation, whether or not the competitor has been injured or damaged by the violation. In an action brought pursuant to this section, the court may award to the competitor any damages actually incurred by reason of the violation. The court shall award reasonable attorneys' fees and costs of suit to the prevailing party in any action brought pursuant to this section.

    8. The Director of the Division of Consumer Affairs in the Department of Law and Public Safety may promulgate regulations pursuant the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to effectuate the provisions of this act.

    9. This act shall take effect immediately.

STATEMENT

    This bill prohibits the advertising of a comparison price which is based upon or refers to another merchant's price unless: the person making the advertisement can substantiate through documents or other reasonable proof that the comparison price is the price offered for sale by the merchant in the trade area during the 60 days prior to or subsequent to the effective date of the advertisement for merchandise of substantially the same kind and quality; and, a clear and conspicuous disclosure is made in the advertisement that the comparison price is another merchant's price, and not the person's own price.

    The bill prohibits the advertisement of a former price of any merchandise unless: the former price is equal to or exceeds the price at which a substantial volume of sales was made in the 60 days prior to or subsequent to the effective date of the advertisement; or, the former price was the price at which the advertised merchandise, or merchandise of substantially the same kind, quality or quantity, was openly and actively offered for sale in the 60 days prior to or subsequent to the effective date of the advertisement; or, the former price is based on a mark-up that does not exceed the supplier's cost plus the usual and customary mark-up used by the advertising merchant in the actual sale of the advertised merchandise, or merchandise of substantially the same kind, quality or quantity, in the recent regular course of business.

    The bill also prohibits the advertisement of a former or comparison price in terms of: (1) "suggested retail price," "inventory price," or similar terms that directly or indirectly compare or suggest the comparison between the cost of supply and the price at retail for the advertised merchandise; and (2) "market value," "valued at" or words of similar import unless the price is the price at which the merchandise, or merchandise of substantially the same kind, quality or quantity, is offered for sale by a reasonable number of merchants in the trade area.

    The bill allows a competitor within the trade area of any party violating the act to bring an action to enjoin the continuance of the violation, whether or not the competitor has been injured or damaged by the violation. The bill allows the competitor to be awarded damages actually incurred by the violation and attorneys' fees.

    As a supplement to the consumer fraud act, P.L.1960, c.39 (C.56:8-1 et seq.) the bill makes use of the existing civil suit and enforcement provisions of that act to deter unlawful practices as defined in the bill. Anyone who commits an unlawful practice by violating a provision of this bill shall be subject to consumer fraud act penalties of not more than $7,500 for a first offense and not more than $15,000 for each subsequent offense.

The "Truth in Pricing Act."