When is a sale not a sale? Online and on the high street, some shops just always seem to be selling at a discount.

Whether it’s the closing down sale that goes on for years, or the crossed-out original price that you can’t remember ever paying, some retailers try all kinds of ways to convince us we are getting a bargain.

The prime minister, Andy Burnham, appears ready to act on this, and last month he pledged to put “an end to phoney bargains”, saying “people are sick and tired of rip-off discounts”.

He said: “If something is advertised as half price, it should actually be half price.”

This autumn a government consultation will look at whether fake claims that products were previously sold at higher prices, invented discounts and misleading recommended retail prices (RRPs) should be added to the list of practices banned under the Digital Markets, Competition and Consumers Act 2024.

Ahead of that, we asked experts to explain what retailers can and cannot do when it comes to offering discounts. Be warned: it’s complicated, so ministers have a job on their hands.

Deceptive pricing

The good news is that the 2024 Act already prohibits “unfair commercial practices” by retailers, including misleading actions and omissions, so deceptive pricing tactics are already often illegal.

Such practices are policed by regulators, including the Competition and Markets Authority (CMA) and by Trading Standards.

If the CMA finds a retailer has misled customers, it is able to issue a financial penalty of up to 10% of a company’s global turnover and force it to issue refunds, without going to court.

But currently, to bring enforcement action about dodgy discounts, the CMA needs to meet certain legal thresholds – and that is not always easy.

The regulator must go through an internal process to decide whether or not the retailer influenced the average consumer to take a decision other than the one they would otherwise have taken. That means demonstrating that a misleading price has affected a shopper’s choice about whether to buy something.

This process can be time-consuming and costly, says Sue Davies, head of consumer rights policy at Which?, the consumer organisation. CMA investigations, for example, typically take three to six months, and can take even longer.

So the government is keen to add egregious and false discount claims to the existing list of 32 practices that are banned under the act.

That would ensure that deceptive pricing tactics would automatically be considered unfair in all circumstances – whether or not they had influenced anyone’s shopping choices.

In theory, this would make it easier for the CMA and trading standards to protect consumers, and deter businesses from doing it in the first place.

“It just makes it more straightforward for them to be able to pursue a case rather than having to go through more complicated legal arguments and provide a lot of evidence in order to make the case that something is misleading,” says Davies.

‘Was £30, now £15’

Late last year, research by Which? looked at 175 Black Friday offers from eight retailers and found that the vast majority of the products were cheaper than, or the same price as, at other times of the year.

Davies says the consumer organisation has on numerous occasions “exposed businesses, including trusted household brands, ripping off customers with dodgy deals that aren’t what they seem”.

In the past, government guidance stated that retailers should sell an item for at least 28 consecutive days at a higher price before they could use that figure as a reference price when discounting it. And it must have been offered at that price during the previous six months.

Under the 2024 Act, “retailers are free to set their pricing, and it’s the intention behind that which really makes a difference”, says Hafsah Nawaz, a lawyer at A&O Shearman who specialises in competition law.

She adds: “It’s not about telling retailers what prices to charge, but about ensuring that the way prices or discounts are presented doesn’t deceive shoppers.”

As a result, some retailers will test the law and see what they can get away with, says Davies.

“We’ve repeatedly found problems with misleading price practices across a whole range of different retailers, and it can be very difficult to get action taken against those [by regulators],” she adds. “And I think part of that is that there’s not enough clarity about what is illegal or not.”

She thinks that putting specific pricing practices, such as the use of misleading RRPs, on a banned practices list “would send a much clearer message to businesses about what they have to do to comply”.

But, she adds, “the wording is going to have to be thought out carefully… It’s not a simple thing to word it, because there will always be loopholes”.

Good practice

To help retailers better understand and stick to their obligations under consumer law, the Chartered Trading Standards Institute (CTSI) has guidance about how to describe discounts. This guidance is not legally binding – but regulators, including the Advertising Standards Authority (ASA) and the CMA, regularly refer to it when making decisions.

According to the guidance, retailers must not make “misleading or unfair” claims when comparing the new price of their products to a reference price, and the quoted saving must be “genuine”.

The guidance does not set out any specific timings, but says it would be bad practice if a product was sold at the higher reference price for a shorter length of time (one month, say) than the discount price (two months, say). The guidance also says that the product should have been sold at the original price at the same store where it is being discounted.

This prevents retailers selling their products at reference prices at, for example, only one outlet in the Outer Hebrides, says Geraint Lloyd-Taylor, a lawyer at Lewis Silkin who specialises in consumer regulation.

“It’s not just about saying it’s on sale – it’s about basically making it available in the same way,” he says. “So if it’s on the retailer’s website as a discount, it should have been on their website at the higher price, too.”

If a product has been getting steadily cheaper over several months, the shop should not quote an old, higher price as if it were the genuine, usual price. “You shouldn’t be talking about a price that was applied three prices ago,” says Lloyd-Taylor.

Everything must go?

The guidelines also state that a discount is unlikely to be a genuine discount if there is no evidence of “significant” sales having been made at the reference price.

“If nobody really buys them, that’s an indication that the prices of those things are not genuine, so when they are discounted, the customer is not getting a good deal, says Lloyd-Taylor. “You’re just being fobbed off with a sort of ‘fake’ higher price.”

Imagine a retailer sells a cushion for £20, then it raises the price to £30 a week before Black Friday, and then it puts the price back down to £20 in its Black Friday sales and claims it has been discounted by £10. In reality, few people will have paid £30 for that cushion throughout the year – but as long as a “significant” number paid that price in the preceding week, the discount may be deemed to be “genuine”.

The situation becomes even more complicated if, during the week the product was on sale at the reference price of £30, it was part of another promotional offer, such as “3 for the price of 2”. In this situation, the £10 Black Friday discount may no longer be seen as “genuine”.

Driving a hard bargain

A government spokesperson told Guardian Money that existing rules to protect consumers from being misled or deceived “can be difficult to prove and uphold”.

“That is why we are considering changing the law to crack down on these misleading pricing tactics … This is not about banning legitimate discounts or stopping retailers from advertising previous prices. It is about making it easier to tackle practices that mislead consumers.”

A spokesperson for the CMA says it believes that “clear, accurate information about price discounts is vital for consumers and helps them shop around to make the best decision, particularly when household budgets are squeezed”.

For its part, Which? says the government must implement these rules swiftly “to give consumers much-needed protection against sneaky pricing tactics, and hold businesses to account with tough enforcement, including fines, if they fall short”.