Chemist Warehouse accused of misleading consumers with “normal price”

Discount pharmacy chain Chemist Warehouse has come under fire from industry groups, which have accused the company of misleading consumers by printing a “normal price” and the amount a customer has apparently saved on store receipts.

The ABC reports the Pharmacy Guild and National Pharmacies group are calling for the Australian Competition and Consumer Commission (ACCC) to investigate the claims as a “matter of urgency”, claiming Chemist Warehouse customers are being misled about the retailer’s pricing strategy.

In a letter to the ACCC seen by the ABC, president of the Victorian branch of the Pharmacy Guild, Anthony Tassone said Chemist Warehouse’s practice of publishing a “normal price” and the amount the customer has saved on their purchase “creates an expectation that a ‘normal price’ could be what other pharmacies charge or [that the saving related to] a price that Chemist Warehouse were previously selling that item at, and it doesn’t appear to be the case”.

Tassone said a Chemist Warehouse sales assistant had told the guild the “you save” value printed on the receipts related to “the price you would pay at another pharmacy if you hadn’t shopped with Chemist Warehouse” and was not “linked back to a previous price that Chemist Warehouse were selling the product for”.

But Tassone said this is problematic as there is no set price for which Australian pharmacies must sell medicines.

“There could be recommended retail prices in some pharmacies, but generally speaking from my experience, scheduled medicines that are over the counter don’t generally have an RRP to benchmark against,” he said.

National Pharmacies told the ABC it has also written to the ACCC to complain about the Chemist Warehouse dockets, while consumer group CHOICE said it has concerns about the way the retailer advertises some of its “lowest” and “best price” guarantees in store.

“What we found is if you rely on these claims, you can often end up wrapped in tricky terms and conditions and indeed end up paying a much higher price than you bargained for,” CHOICE told the ABC.

A spokesperson for Chemist Warehouse told the ABC the retailer has done nothing wrong and said “normal price is the price normally charged at other pharmacy retailers”. 

Melissa Monks, special counsel at law firm King & Wood Mallesons, describes the allegations against Chemist Warehouse as “very interesting”.

“The ACCC will no doubt be closely scrutinising Chemist Warehouse’s pricing representations given the multiple complaints, as well as the regulator’s recent enforcement action in relation to pricing like online drip pricing and ‘discounts off what’ in the energy sector,” Monks told SmartCompany.

Monks says the ACCC and the courts have previously been very clear about the type of pricing representations at risk of being misleading.

“In particular, that savings claims should be based on an RRP where goods have actually been sold at that RRP or reflect the genuine savings off the current market price for goods to avoid being misleading,” she says.

Monks says the challenge for Chemist Warehouse is “there doesn’t seem to be a ‘market price’ for all of the goods it sells given their nature or because this may constantly fluctuate in a very competitive market”.

“Even if there is a market price, the unqualified price that appears on dockets and sometimes in-store may lead consumers to believe that the savings is based on the price at which Chemist Warehouse previously sold the good, which doesn’t seem to be the case,” Monks says.

While the ACCC is yet to initiate any action against Chemist Warehouse, Monks says the watchdog has many tools at its disposal to investigate complaints of this nature.

“The ACCC has very wide powers and can easily issue Chemist Warehouse with a substantiation notice to justify its savings claims within a 28 day deadline, or rely on other powers to compel documents to be produced and questions answered,” she says.

“So like any business making such claims, it should always have this evidence to hand before making any claims.”

“There is also no comfort for Chemist Warehouse in the fact that these savings claims seem to have been in the market for some time without challenge. This is bar to the ACCC and competitors taking action and has certainly happened before.”

SmartCompany contacted Chemist Warehouse but did not receive a response prior to publication.

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