Price discrepancy at checkout? Compensation of up to 10,000 NIS available without proof of damages

What is a price discrepancy?

A discrepancy between advertised and checkout prices is unlawful. In some cases, you can claim up to 10,000 NIS compensation without proof.

Imagine this: You pick a product, see its price, then buy it. But at checkout, the price is different, usually higher. If the cashier refuses to adjust it, and you pay more, you might be a victim of consumer harm.

This harm varies and isn’t just in physical stores. A business might advertise a sale but not honor it. They might not show any price. Or they display a price with an asterisk, meaning “excluding VAT.” These are consumer harms, sometimes even criminal offenses. They violate the rule to show an inclusive price.

This article explains “inclusive price.” It details legal issues of price discrepancies. It covers who must display inclusive prices. Finally, it outlines consequences for businesses breaking this rule.

Note: This article addresses the obligation to display inclusive prices only for products. The obligation concerning services is discussed in a separate article.

What is an “Inclusive Price”?

An inclusive price encompasses “the total payment for a good or service, including all applicable taxes or levies on its sale or purchase collected by a trader.” This includes VAT, fees, compulsory payments, and any other charge associated with the product’s purchase that the consumer cannot practically waive (e.g., handling fees).

The Obligation to Display an Inclusive Price

The Consumer Protection Law of 1981, applicable only to transactions between traders and consumers, details the obligations of traders and the rights of consumers, emphasizing consumer rights. However, it’s important to note that there are traders excluded from the Consumer Protection Law; consequently, the obligation to display an inclusive price doesn’t apply to them.

According to Section 17b of the Law, a trader offering, displaying, or selling goods to a consumer must display the inclusive price on the goods or their packaging, subject to three parameters:

1. In a clearly visible location;
2. In clear and legible numerals;
3. Only in Israeli currency.

This obligation also applies to products displayed in a manner suggesting they—or similar products—are offered for sale.

Products Excluded from This Obligation

Businesses are exempt from displaying a full price for products intended for sale outside Israel. (Section 17z(a)((1) of the Consumer Protection Law).

VAT Changes: A Grace Period for Partial Price Display

The legislature acknowledges that levies on product prices fluctuate. Therefore, businesses cannot be required to immediately update all prices whenever VAT changes.

A seven-day grace period is granted. For seven days following a change in tax, fee, or other compulsory payment related to sales, the trader may exclude the change from the displayed price, provided they prominently display a notice that the price excludes the increased/reduced rate (Section 17e of the Consumer Protection Law).

If you encounter this situation during the grace period and the business has clearly indicated it, you shouldn’t be upset by the price difference between the product and checkout.

Price Discrepancy: Which Price Prevails?

The legislature recognizes that pricing errors on products can occur, especially in stores with numerous items, but still prioritizes consumer protection. A specific provision clarifies that:

The binding price is the one displayed on the product, even if the checkout price differs. (Section b(d) of the Consumer Protection Law).

While this section could theoretically work both ways (a lower checkout price might still necessitate payment of the higher price), reality shows that such errors are rare and are not exploited by businesses.

Online Purchases

The same obligation applies online, with necessary adjustments. Instead of a cash register, there’s a payment page. If a business advertises a price online but the payment page shows a different (partial) price, this constitutes a violation of the inclusive price obligation.

This can manifest in many ways: a partially displayed price accompanied by a separate mention in the website’s terms and conditions that prices exclude VAT and other fees, or a footnote under the price stating the same.

However, such tactics won’t hold up in court. Any failure to display the full price online constitutes a clear violation.

Consumer Rights in Case of Inclusive Price Violation (Compensation Without Proof of Damage)

Amendment 21 to the Consumer Protection Law lists cases where a court can order a business to pay compensation without proof of damage, up to 10,000 NIS per violation (“exemplary damages”).

Violating the inclusive price obligation—e.g., a price discrepancy—is included in this list. However, consumers can claim exemplary damages only if two conditions are met:

1. The consumer requested the business to charge the price displayed on the product (not the checkout price), and the business refused;
2. Before filing a lawsuit, the consumer sent the business a written notice of intent to pursue legal action, detailing their demands (see note**). (Sections 31a(a)(5) and 31a(b) of the Consumer Protection Law)

Important Note: A written demand is solely for claiming compensation without damage proof. Even without it, you can sue for other compensation types. This includes damages with proof of financial or non-financial harm, like distress. You can also pursue both options simultaneously.

However, compensation isn’t capped at 10,000 NIS! For repeated, ongoing, or aggravated violations, courts may award up to 50,000 NIS without proof of damage. (Section 31a(c) of the Consumer Protection Law, 5741-1981).

Judicial Considerations in Awarding Exemplary Damages

Section 31a of the Consumer Protection Law sets a pro-consumer standard. When awarding exemplary damages, the court ignores actual damage amounts.

This streamlines the process for consumers. It removes the need for extensive proof of actual damage. This is especially helpful where harm is minor inconvenience.

Under Section 31a(e), the court considers these factors:

• Law enforcement and deterrence.
• Encouraging consumer rights enforcement.
• Severity, financial scope, and violation circumstances.
• Financial value of the transaction.
• Business’s financial scope.
• Statutory fine for the violation (if applicable).

Beyond Compensation: Businesses Face Financial Penalties and Criminal Fines

The Consumer Protection Law authorizes the Israeli government to appoint an official to head the Authority for Consumer Protection and Fair Trade. This official is responsible for enforcing the law and imposing fines on violators.

The law empowers this official to impose financial penalties on service providers who fail to display inclusive prices (Sections 1, 19, and 19a of the Consumer Protection Law).

The amount of the financial penalty varies depending on the type of business: Non-corporate businesses (exempt/licensed) – up to 7,170 NIS. Corporate businesses (Ltd., associations, etc.) – up to 22,530 NIS (as of January 2023).

Furthermore, violating businesses face criminal fines of up to 87,600 NIS (updated January 2023) (Section 23(c)(8) of the Consumer Protection Law; Section 61(a)(2) of the Penal Code).

Important Note: The official cannot immediately impose financial penalties. The law requires them to send the business a letter detailing the violation and their intention to impose a penalty.

Conversely, the business has the right to present their arguments (orally or in writing). To do so, they must notify the official within 45 days of receiving the notice. Upon request, the official may extend this notification period by an additional 45 days (Section 22v of the Consumer Protection Law).