What a compare-at price is measured against

Three different claims that look alike

A higher number beside a lower one can point at three different things. It can point at the seller's own past price. It can point at what other sellers charge. It can point at a figure the manufacturer suggested.

The Federal Trade Commission's Guides Against Deceptive Pricing, at 16 CFR part 233, treat those as separate problems with separate tests. Section 233.1 covers the seller's own former price, and a companion piece here covers that one.

Sections 233.2, 233.3 and 233.4 cover the rest, and they are the ones that reach a phrase like compare at.

The common thread is that each higher figure is a factual claim about somebody's actual trading, and each has a defined way of being true.

Comparing to other sellers: the trade area test

Section 233.2 opens on the practice. It describes "bargain advertising" that offers "goods at prices lower than those being charged by others for the same merchandise in the advertiser's trade area (the area in which he does business)."

It allows this on a temporary or permanent basis. But "in either case the advertised higher price must be based upon fact, and not be fictitious or misleading."

The test is where sales happen, not where a price is posted. The advertiser "should be reasonably certain that the higher price he advertises does not appreciably exceed the price at which substantial sales of the article are being made in the area."

And substantial is defined in the same sentence, in reader terms: "a sufficient number of sales so that a consumer would consider a reduction from the price to represent a genuine bargain or saving."

The section's own counter-example is a retailer citing a high figure charged only by a few small outlets, while the larger outlets sell at about the advertised price. The guidance calls that deceptive, because the outlier price "would have no real significance" to the customers being addressed.

Comparable value has two conditions, not one

Paragraph (c) of the same section reaches the other version, where the comparison is to a different product rather than the same one.

It describes "a reduction from the prices being charged either by the advertiser or by others in the advertiser's trade area for other merchandise of like grade and quality." The parenthetical it supplies is "comparable or competing merchandise."

The guidance says this "can serve a useful and legitimate purpose," and then attaches two conditions. It has to be "made clear to the consumer that a comparison is being made with other merchandise," and the other merchandise has to be "of essentially similar quality and obtainable in the area."

The price test carries over as well. The advertiser should be reasonably certain "that the price advertised as being the price of comparable merchandise does not exceed the price at which such merchandise is being offered." The comparison is to what "representative retail outlets in the area" charge.

So a comparable-value claim asserts three things at once: that a comparison is being drawn, that the other thing is genuinely similar, and that its price is a real one.

Why a list price is the hardest of the three

Section 233.3 is about a manufacturer's list or suggested retail price, and it opens by explaining why the figure carries weight with readers.

"Many members of the purchasing public believe that a manufacturer's list price, or suggested retail price, is the price at which an article is generally sold."

Then it states the problem. A list price misleads "To the extent that list or suggested retail prices do not in fact correspond to prices at which a substantial number of sales of the article in question are made." Where that gap exists, "the advertisement of a reduction may mislead the consumer."

The guidance is candid about how common that gap has become. It points at two causes: "the widespread failure to observe manufacturers' suggested or list prices, and the advent of retail discounting on a wide scale." Together those "have seriously undermined the dependability of list prices as indicators of the exact prices at which articles are in fact generally sold at retail."

And it draws the blunt conclusion: "Today, only in the rare case are all sales of an article at the manufacturer's suggested retail or list price."

But a list price is not automatically fictitious

The section refuses the easy overcorrection. "But this does not mean that all list prices are fictitious and all offers of reductions from list, therefore, deceptive."

It gives the passing standard. A list price "will not be deemed fictitious if it is the price at which substantial (that is, not isolated or insignificant) sales are made in the advertiser's trade area."

And the failing standard sits in the same paragraph. It applies "if the list price is significantly in excess of the highest price at which substantial sales in the trade area are made." In that case "there is a clear and serious danger of the consumer being misled by an advertised reduction from this price."

Note that the pass and the fail are both measured against actual sales, not against what any party published. A number on a tag proves that somebody printed a tag.

The duty splits between the retailer and the maker

Paragraphs (e) through (i) divide responsibility, and the split is practical rather than formal.

A retailer is expected to know its own area. Before advertising a manufacturer's list price as a comparison, "the retailer should ascertain whether the list price is in fact the price regularly charged by principal outlets in his area."

The obligation is framed as avoiding a specific impression. A retailer "should be careful to avoid creating a false impression that he is offering a reduction from the price at which the product is generally sold in his trade area."

A national manufacturer gets a lighter duty, for a stated reason: one "cannot be required to police or investigate in detail the prevailing prices of his articles throughout so large a trade area." Advertising a list price in good faith, as an honest estimate that does not appreciably exceed the highest price at which substantial sales are made, is not treated as deceptive.

There is one hard line at the end. A manufacturer "may not affix price tickets containing inflated prices as an accommodation to particular retailers who intend to use such prices as the basis for advertising fictitious price reductions."

Bundles: the test is the price of the thing you must buy

Section 233.4 covers offers where the bargain arrives as extra merchandise. It describes "bargains in the form of additional merchandise to be given a customer on the condition that he purchase a particular article at the price usually offered by the advertiser."

It lists the wordings it reaches, and observes that "The forms which such offers may take are numerous and varied, yet all have essentially the same purpose and effect."

The operative condition is in the phrase "at the price usually offered by the advertiser." The failure the section names is what happens when that stops being true.

Deception can arise "Where the seller, in making such an offer, increases his regular price of the article required to be bought." The same applies where he "decreases the quantity and quality of that article," or attaches other conditions.

The disclosure duty is short and covers timing. Whenever such an offer is made, "all the terms and conditions of the offer should be made clear at the outset."

How this sits beside the guide on the word free

A separate Commission guide, at 16 CFR part 251, governs the word free itself and is covered elsewhere on this site. The two documents ask different questions and both can apply to one offer.

The free guide is largely about the offer's disclosure and about what regular price means. Section 233.4 is about whether the article the buyer is required to purchase has been quietly repriced or shrunk.

A bundled peptide offer can satisfy one and fail the other. Reading only the free guide would miss a raised base price; reading only 233.4 would miss an undisclosed condition.

What is checkable, and what is not

None of these tests can be run from the outside with certainty. Nobody browsing a site knows what substantial sales in a trade area look like for a compounded peptide, and there is no public register of them.

What a reader can do is notice which of the three claims is being made. A compare-at figure that names no comparator is asserting something about other sellers without identifying any. A retail-value figure attached to a product with no retail channel is asserting something about a market that may not exist.

And the guidance supplies the vocabulary to ask the seller a precise question, which is more useful than a general suspicion. What is that number, and where is it charged.

Part 233 is titled Guides Against Deceptive Pricing in the Code itself, and its sections carry bracketed Guide labels. What weight a Commission guide carries in a particular enforcement action is a legal question this page does not answer, and nothing here is legal advice or a statement about any named seller.

Sources

Each document below is named as it names itself, with the date printed on that document rather than the day it was read.

1. Title 16 Code of Federal Regulations section 233.2, Retail price comparisons; comparable value comparisons — Electronic Code of Federal Regulations, Office of the Federal Register, November 1967
2. Title 16 Code of Federal Regulations section 233.3, Advertising retail prices which have been established or suggested by manufacturers (or other nonretail distributors) — Electronic Code of Federal Regulations, Office of the Federal Register, November 1967
3. Title 16 Code of Federal Regulations section 233.4, Bargain offers based upon the purchase of other merchandise — Electronic Code of Federal Regulations, Office of the Federal Register, November 1967