Advertised Price Details

A business will offer a product or service at a certain price and use this price in its advertising—if it believes that potential customers will find the price attractive. Supermarkets, for example, may highlight low prices for certain lines in order to attract customers who will then buy additional products while they are in the store. An advertised price is usually an attractive price and differentiates a business from its competition.

However, an advertised price is not necessarily a binding contract between the seller and the purchaser. The law recognizes that mistakes happen. If a customer discovers that the price at the register is higher than the advertised price, the seller is not obliged to honor the advertised price. Of course, if a business regularly advertises prices that have no relation to the price it actually charges, it is deliberately misleading the purchaser and this practice is illegal.

When a business has made a mistake and the advertised price is lower than the actual price, the business may choose to honor the advertised price as a matter of goodwill. Whether it does this or not will depend on how much the company stands to lose if it honors the advertised price, a store that has mispriced a pair of shoes might accept the mistake and the consequent loss and make sure that it doesn't happen again. Nevertheless, a business is not legally obliged to honor an advertised price and the customer is at liberty to refuse to purchase the item at the actual price.

Real World Example of Advertised Price

In June 2014, the New York Attorney General opened an investigation into Walmart Stores, Inc. over a case of false price advertising. As part of a Father's Day sales campaign, Walmart had advertised 12-packs of soft drinks for $3.00. But, when customers in New York State bought the soft drinks, they paid $3.50.

In one New York store, Walmart staff told a customer, who had pointed out the discrepancy, that the promotion was national and did not apply to New York. At face value, there was no particular reason why Walmart would not offer the special price to one set of customers. Walmart then told customers who complained that New York State levied a tax on sugar that this was not the case.

The Attorney General's investigation revealed that Walmart had programmed its computers in New York not to recognize the offer price. This was not the first time that Walmart in New York had done something similar. Three months prior, the same thing had happened with another promotion. Records showed that Walmart had sold 66,000 packs of soft drinks at $3.50 instead of $3.00. They were ordered to pay over $66,000 in fines and costs and were ordered to improve their internal reporting. In this case, the advertised price was not a mistake—it was honored everywhere else. The store was misleading its customers.