Fraudulent Marketing??

[Deleted User]

Hi - can someone advise on the below please?

A large office supply business is selling identical consumables with different labels for different prices - specific example:

They have two types of floor cleaners - the standard version and a “premium plus” one which costs 30% more to purchase - however one of their employees has stated in writing that both floor cleaners are the exact same product with just different labels - are they allowed to do this?

If it can be proven that the two products are identical then is this just a simple case of fraud?

How serious is any potential breach of the law? (The company is one of the largest in it’s sector with over 10,000 customers and supplies large businesses and organisations including the NHS and local authorities)

In addition there is widespread price discrimination - different pricing for different customers - more than 150% in some cases - is this just unethical or possibly illegal too? (I don’t mean just based on volume of orders etc but essentially they amend their pricing depending on how much resistance they get from customers - with local authorities and the NHS often paying more than private companies)

ArbitraryRandom

Unless they're making different claims (ignoring puffery) then I'm not sure what law they could be breaking - it's fairly common for the same product to be sold under different brands/at different prices... I think there's a long thread on here about tracking down brand name products being sold 'white label' by supermarkets for cheaper.

It's also not unusual (b2b) to have the SAME product/brand sold to different customers at different prices, depending on the specifics of the negotiation (a green book price). 

Is there any reason the NHS procurement can't just buy the cheaper version of the product? 

You might find this interesting: https://www.linkedin.com/pulse/single-product-many-names-different-prices-vivek-arya

the_lunatic_is_in_my_head

Regarding the labelling, such a tactic could be a breach of the Consumer Protection from Unfair Trading Regulations but it's for the likes of Trading Standards to prosecute for offences. 

I assume it would be claimed the remark made was in error unless the items were inspected and confirmed to be exactly the same. 

Different pricing for different customers is common with companies supplying B2B, I'm sure we've all read the stories in the past about the NHS paying high prices for for basic medicine such as paracetamol or loo roll and it wouldn't surprise me if public bodies such as the NHS and local authorities are easier pickings for this kind of behaviour but it seems to be the way it goes. 

 

eskbanker

First things first - does this company sell to the general public or just to businesses?

Obviously any consumer rights will only apply for personal purchases....

ArbitraryRandom

the_lunatic_is_in_my_head said:

Regarding the labelling, such a tactic could be a breach of the Consumer Protection from Unfair Trading Regulations but it's for the likes of Trading Standards to prosecute for offences. 

That would only apply to retail, not b2b - but I'd be interested in the specific part of the regs you think this would violate? 

We'd really need a link to the descriptions of the two products referenced to give any meaningful advice I think... 

the_lunatic_is_in_my_head

ArbitraryRandom said:

the_lunatic_is_in_my_head said:

Regarding the labelling, such a tactic could be a breach of the Consumer Protection from Unfair Trading Regulations but it's for the likes of Trading Standards to prosecute for offences. 

That would only apply to retail, not b2b - but I'd be interested in the specific part of the regs you think this would violate? 

We'd really need a link to the descriptions of the two products referenced to give any meaningful advice I think... 

I was assuming OP was a consumer

Assuming such, it would likely be viewed as a misleading action:

https://www.legislation.gov.uk/uksi/2008/1277/regulation/5

(2) A commercial practice satisfies the conditions of this paragraph—

(a)if it contains false information and is therefore untruthful in relation to any of the matters in paragraph (4) or if it or its overall presentation in any way deceives or is likely to deceive the average consumer in relation to any of the matters in that paragraph, even if the information is factually correct; and

(b)it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.

(4) The matters referred to in paragraph (2)(a) are—

(b)the main characteristics of the product (as defined in paragraph 5);

(5) In paragraph (4)(b), the “main characteristics of the product” include—

(o)specification of the product;

Of course if the company is genuinely trade (B2B) only then consumer legislation obviously doesn't apply. 

user1977

If they are actually stating something incorrect about the specification then you might have a point, but otherwise how is this any different from, say, a supermarket own-brand product made on the same production line as the more expensive branded equivalent?

If you know the cheaper product is just as good, then buy it!

(as already pointed out this is nothing to do with consumer rights, and there is a whole raft of legislation about public sector procurement which might come into this, but I'm not going to try...)

the_lunatic_is_in_my_head

user1977 said:

how is this any different from, say, a supermarket own-brand product made on the same production line as the premium branded equivalent?

The supermarket own brand will be made to the supermarket's own recipe making the product ever so slightly different, a tiny tweak to the recipe may shave pennies off the production cost saving the supermarket a lot of money over time and the consumer will accept the difference because a) it's cheaper b) we very quickly adapt to new tastes forgetting what we experienced before. 

Equally the branded product is priced off the back of brand recognition rather than 2 identical items with the same branding and one being labelled "premium".

To be fair, I assumed the two floor cleaners are branded the same and that may not be the case, if it isn't whilst the staff member may claim they are the same there may be very slight differences in the quality of the materials or manufacturing process that aren't particularly noticeable during use but perhaps create, even if marginal, a better cleaning result or cause the product to have a longer life.

ArbitraryRandom

the_lunatic_is_in_my_head said:

user1977 said:

how is this any different from, say, a supermarket own-brand product made on the same production line as the premium branded equivalent?

The supermarket own brand will be made to the supermarket's own recipe making the product ever so slightly different, a tiny tweak to the recipe may shave pennies off the production cost saving the supermarket a lot of money over time and the consumer will accept the difference because a) it's cheaper b) we very quickly adapt to new tastes forgetting what we experienced before. 

Equally the branded product is priced off the back of brand recognition rather than 2 identical items with the same branding and one being labelled "premium".

To be fair, I assumed the two floor cleaners are branded the same and that may not be the case, if it isn't whilst the staff member may claim they are the same there may be very slight differences in the quality of the materials or manufacturing process that aren't particularly noticeable during use but perhaps create, even if marginal, a better cleaning result or cause the product to have a longer life.

That's not my understanding of 'white label' products... AFAIK, there doesn't need to be any material difference (hence the link I posted upthread about this being common marketing practice). 

White Label Products:

White label products are manufactured by a contract or third-party manufacturer and sold under your brand name. As the buyer, you ONLY specify what the label looks like. In this case, the manufacturer is already an expert in manufacturing the product you want,  they produce the same product under other brand names, and therefor the manufacturer specifies the what goes in it and how it’s packaged other than the brand name you specified that appears on the label.

A White Label Product Example: You (Mr. Smith) want an Apple Pie that Looks like you made it, but you don’t have a recipe or the ability to mass-produce apple pies. You contract with a manufacturer who specializes in making delicious apple pies. They take their apple pie, bake it, package it, and put your label Mr. Smith’s apple pies on it.  They ship Mr. Smith’s Apple pies to you. You can either: Sell Mr. Smith’s Apple Pies to Wholesalers who then sell it to retail grocers, or you sell Mr. Smith’s Apple Pies at www.mrsmithspplepies.com.

As for the rest, agreed - if they're selling directly to consumers (not b2b), and if the branding is the same, then the devil will be in the details (are the pack sizes identical, is the manufacturing process, are they making different claims, etc).  

the_lunatic_is_in_my_head

ArbitraryRandom said:

That's not my understanding of 'white label' products... AFAIK, there doesn't need to be any material difference (hence the link I posted upthread about this being common marketing practice). 

No there doesn't always need to be a difference, something like a banana is a banana and with things like basic medicine I would assume a paracetamol is a paracetamol but with more complex products there can be differences, something like a biscuit might have a different amount of salt, a cholate bar may have less cocoa solids or something like a ready meal may have a lower meat content. 

For me the Lidl chocolate hobnobs are as good as the real deal but their own brand Digestives miss the spot for some reason, guess it depends on the product and personal preference.  

user1977

the_lunatic_is_in_my_head said:

ArbitraryRandom said:

That's not my understanding of 'white label' products... AFAIK, there doesn't need to be any material difference (hence the link I posted upthread about this being common marketing practice). 

No there doesn't always need to be a difference, something like a banana is a banana and with things like basic medicine I would assume a paracetamol is a paracetamol but with more complex products there can be differences, something like a biscuit might have a different amount of salt, a cholate bar may have less cocoa solids or something like a ready meal may have a lower meat content. 

For me the Lidl chocolate hobnobs are as good as the real deal but their own brand Digestives miss the spot for some reason, guess it depends on the product and personal preference.  

And even where there are differences, it doesn't necessarily mean the expensive one is superior!

(isn't now around the time we get the blind taste tests of mince pies?)