What is the obligation to display a full price?
In 1981, the Consumer Protection Law came into force, dealing only with transactions between a business and a consumer. The law defines and details both the obligations of businesses and the rights of consumers, emphasizing consumer rights. However, it is important to know that there are businesses to which the Consumer Protection Law does not apply; and accordingly, the obligation to display a full price is also not valid for them.
The Consumer Protection Law empowers the Minister of Economy to enact regulations regarding the implementation of certain provisions therein. Indeed, in 2012, regulations were enacted that clarify the obligation to display the price – the Consumer Protection (Display of Service Prices) Regulations, 5772-2012.
According to Section 17g of the Law and Section 2(b) of the Regulations, certain service providers are required to display the full price of their services under three parameters:
- In a visible place;
- In clear and legible numbers;
- And only in Israeli currency (Except for a tourism and vacation package leaving Israel).
What if the VAT changed?
The legislator took into account that the levies on product prices change from time to time. Accordingly, businesses cannot be required to replace all prices in the business at the same moment that the VAT rate changes, for example.
Therefore, the legislator gave service providers a “grace period” of 7 days. That is, for seven days from the day a tax, fee, or other mandatory payment levied on the sale changed, the businessperson may not include the change in the displayed price. However, this is on condition that they prominently state at the business premises that the price does not include the increased/reduced rate. (Section 17e of the Consumer Protection Law).
We emphasize again: the “grace period” is only relevant to mandatory payments levied on the purchase. To the extent that the service provider wishes to add various additions to the product price, they must include these additions immediately.
Which service providers are subject to the obligation to display a full price?
First, the obligation applies only if the services are not provided entirely outside Israel. The obligation applies if the business or part of it gives or receives payment for any of the following four:
(1) Hairdressing service – hair treatment and any other service provided in a hairdressing salon;
(2) Eatery service – sale or serving of food and beverages;
(3) Laundry service – including washing, cleaning, dry cleaning, ironing, and dyeing of laundry;
(4) Public entertainment for money or free – theatrical or cinema performances, concerts, discos, dance performances, dances, cabaret, circus, games or sports, and any similar entertainment, whether for consideration or not, except for a lecture or debate whose main purpose is educational, even if they are accompanied for demonstration purposes by the display of pictures or the playing of sounds.
Sections 1 and 2(a) of the Consumer Protection (Display of Service Prices) Regulations, 5772-2012.
Is it necessary to display a full price even when only part of the service is provided in Israel?
Yes. The aforementioned service providers are exempt from the obligation to display a full price only if the entire service is performed outside Israel. So if part of the service is performed in Israel and part abroad, the obligation to display a full price must be met (Section 17z(a)(1) of the Consumer Protection Law).
A service provider did not display a full price? Monetary penalty and criminal fine
The Consumer Protection Law authorizes the Government of Israel to appoint a supervisor who will be the director of the Authority for Consumer Protection and Fair Trade (Sections 1, 19, and 19a of the Consumer Protection Law). The supervisor is responsible for enforcing the provisions of the law and imposing fines against violators.
Among other things, the law authorizes the supervisor to impose a monetary penalty on a service provider who did not display a full price.
The amount of the monetary penalty varies depending on the type of business: a business that is not a corporation (exempt/licensed) – up to a total of 7,170 ₪. And a business that is a corporation (ltd., association, etc.) – up to a total of 22,530 ₪ (as of January 2023).
In addition, the violating business is liable to a criminal fine of up to 87,600 ₪, as of January 2023. (Section 23(c)(8) of the Consumer Protection Law; Section 61(a)(2) of the Penal Code).
It is important to note: the supervisor is not authorized to impose a monetary penalty immediately. The law requires the supervisor to send the businessperson a letter detailing the violation and notifying them of their intention to impose a monetary penalty. Conversely, the businessperson is entitled to present their arguments to the supervisor (orally or in writing).
A businessperson who wishes to do so is required to notify the supervisor within 45 days of the supervisor’s notification. If the businessperson requests, the supervisor is authorized to extend the businessperson’s “notification period” by an additional 45 days (Section 22f of the Consumer Protection Law).
When can you sue?
Although Amendment No. 21 to the Consumer Protection Law sets out a list of cases in which a court can order a businessperson to pay compensation without proof of damage up to a total of 10,000 ₪ for each violation (“exemplary damages”). However, the non-display of a full price for services is not on this list of cases.
Important Note! This does not mean that it is impossible to file a contractual or tort claim for “ordinary” damages (i.e., not exemplary); only that exemplary damages cannot be claimed without proof of damage.
Incidentally, the situation is different when a businessperson does not display a full price for physical products; that is, when there is a discrepancy between the price displayed on the product and the price at the checkout. In this case, exemplary damages can definitely be claimed (of course, when the case is suitable for it).
