Discrepancy in price at checkout? Compensation of up to 10,000 NIS available without proof of damages.

A discrepancy between the advertised price and the price at the checkout is unlawful. In certain cases, compensation of up to 10,000 NIS may be claimed without proof of damages.

Imagine selecting a product, noting its displayed price, and proceeding to purchase it. However, at checkout, the price differs (typically higher).

Despite complaints, if the cashier refuses to adjust the price, and you pay the higher amount, you may have been a victim of consumer harm.

This consumer harm takes various forms (and isn’t limited to physical stores): a business might advertise a promotional price but fail to honor it; fail to display a price at all; or display a price with an asterisk indicating “excluding VAT” (or other charges). These situations constitute consumer harm (and sometimes criminal offenses): a violation of the obligation to display an inclusive price.

This article details the meaning of “inclusive price,” the legal ramifications of price discrepancies between the product and checkout, who is obligated to display inclusive prices, and the consequences for businesses violating this obligation.

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 only relevant for claiming compensation without proof of damage. Even without a written demand, you can still sue for other types of compensation, such as damages with proof of financial or non-financial harm (such as distress). You can also pursue both avenues simultaneously.

But the compensation doesn’t have to stop at 10,000 NIS! In cases of repeated, ongoing, or aggravated violations, the court may award compensation without proof of damage up to 50,000 NIS (Section 31a(c) of the Consumer Protection Law, 5741-1981).

Judicial Considerations in Awarding Exemplary Damages

Section 31a of the Consumer Protection Law establishes a pro-consumer standard. When ordering exemplary damages, the court will not consider the amount of actual damages.

This simplifies the process for consumers, eliminating the need for extensive proof that the claim amount corresponds to the actual damages incurred, particularly in cases where the only harm is minor inconvenience.

According to Section 31a(e) of the Law, the court will consider the following: (a) law enforcement and deterrence; (b) encouraging consumer rights enforcement; (c) the severity, financial scope, and circumstances of the violation; (d) the financial value of the transaction; (e) the business’s financial scope; (f) the statutory fine for such a 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).