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?
Price Levies: Understanding the Grace Period
Legislators know product levies change often. Businesses can’t instantly replace all prices. For example, when VAT rates change.
Grace Period: What Businesses Can Do
Service providers get a 7-day “grace period.” For seven days, they don’t include tax changes. This applies to fees or other payments. But, they must prominently display a notice. It states the displayed price excludes the new 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).
Consumer Protection Law: Penalties for Not Displaying Full Price
No full price displayed? Expect a monetary penalty and criminal fine. The Consumer Protection Law enables appointing a supervisor. This director enforces the law and imposes fines.
Monetary Penalties: How Much Will It Cost?
The supervisor can fine service providers. The penalty varies by business type. Non-corporations (exempt/licensed) face up to ₪7,170. Corporations (ltd., association) face up to ₪22,530 (Jan 2023).
Criminal Fines: Additional Consequences
Violating businesses also face criminal fines. This can be up to ₪87,600 (Jan 2023).
Penalty Process: What to Expect
Supervisors can’t impose immediate penalties. They must send a detailed violation letter. This notifies the business of intent to fine. Businesses can present their arguments. They have 45 days to notify the supervisor. The supervisor can extend this by another 45 days.
When can you sue?
Consumer Protection Law: Exemplary Damages
Amendment No. 21 lists cases for compensation. Businesses may pay up to ₪10,000 without damage proof. These are “exemplary damages.”
Full Price Display: Not for Exemplary Damages
However, not displaying a full service price is not listed. This means no exemplary damages without proof.
Ordinary Damages: Still Claimable
Important: You can still file for “ordinary” damages. This includes contractual or tort claims. Only exemplary damages require proof of harm here.
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).
