Law to Halt ‘Phony Sales’ Ready for Legislation

The Knesset Economics Committee is preparing for its second and third reading a bill that would prevent retail stores from advertising “sales” that really are not. The law was proposed and promoted by Economy Minister Eli Cohen, and has wide support among all Knesset factions. According to the Ministry’s Consumer Protection Authority, the law is necessary because “consumers are not rational, and when they see the word ‘sale’ they immediately believe they are getting a good deal.”

At a hearing last week, representatives of fashion stores, restaurants and travel organizations expressed opposition to the law. Committee chairperson MK Eitan Cabel said that the session was not called “to negotiate changes. The law is important enough that we will try and pass it as is.”

Under the law, a sale would have to offer a substantial discount off the regular price of items in order to qualify as a sale – and that discount would have to be off the regular price of an item, not the special “original price” which retailers are wont to adopt (and which is perhaps 20 percent over the real regular price) before they offer a discount, or off the “suggested retail price” that is never charged.

The law is the result of activity by consumer groups, which for years have been railing against deceptive practices of retailers, Globes reported. Various actions have been taken by groups against the phenomenon before; earlier in 2017, the Israel Consumers Union filed a class-action lawsuit against the Aprile cosmetics chain and the Mashbir Letzarchan department store chain, charging both with deceptively promoting a “sale” price on perfume that really wasn’t. The court ruled against the defendants, fining them NIS 625,000, but as the court did not require the stores to refund cash to the plaintiffs, they were able to fulfill the judgment by distributing discount coupons – a solution the Union severely criticized, as it essentially rewarded the chains by bringing more customers into their doors, exactly what they hoped to attain with the misleading advertising.

Commenting on the law, Cohen said that “my aim is for there to be a true discount when items go on sale. We seek to encourage true competition, and discourage efforts to trick consumers. We need more laws and rules to protect Israeli consumers. Consumers need to be fully informed in order to make a buying decision.”