The Guides provide parameters for different types of price comparisons. The first one is a comparison of a current price against a former price. This pertains to most “was/now” pricing as well as percentage and dollar savings claims. The key passage dealing with former price comparisons states:
“If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison.”
The Guides do not define “actual, bona fide price,” “regular basis,” or “reasonably substantial period of time.” The document does provide an example, which helps clarify, though not completely:
“John Doe is a retailer of Brand X fountain pens, which cost him $5 each. His usual markup is 50 percent over cost; that is, his regular retail price is $7.50. In order subsequently to offer an unusual “bargain”, Doe begins offering Brand X at $10 per pen. He realizes that he will be able to sell no, or very few, pens at this inflated price. But he doesn’t care, for he maintains that price for only a few days. Then he “cuts” the price to its usual level—$7.50—and advertises: “Terrific Bargain: X Pens, Were $10, Now Only $7.50!” This is obviously a false claim. The advertised “bargain” is not genuine.”
This example should sound familiar to many retailers, because it describes a pervasive advertising practice. It identifies the legality of the price comparison as being related to the validity of the original or reference price (actual bona fide price) and the length of time the item was offered at the reference price prior to discounting (regular basis or reasonably substantial period of time).