Price Gouging In Australia: Understanding The Laws For Your Business

When costs spike or demand surges, it can be tempting to lift prices quickly. But in Australia, charging significantly higher prices in a crisis (often called “price gouging”) comes with serious legal and reputational risks.

Even though there’s no general “price control” law setting what you can charge, how you set and advertise prices is regulated. If you mislead customers or exploit a vulnerable situation, you could breach the Australian Consumer Law (ACL) and attract enforcement action.

In this guide, we’ll break down what price gouging looks like, the key laws that apply to pricing in Australia, and practical steps to set fair, compliant prices-especially during shortages or emergencies.

What Is Price Gouging In Australia?

“Price gouging” isn’t a defined legal term in the ACL. It’s a general way people describe very steep price rises for essential goods or services-often during a disaster, shortage or peak demand period.

In normal times, businesses can set prices as they choose. However, problems arise when pricing practices mislead consumers, omit important information, or take advantage of vulnerable circumstances (for example, selling essential items at extreme mark-ups during a declared emergency).

So while “price gouging” itself isn’t automatically illegal, the conduct surrounding a price rise can breach consumer law-particularly if it involves misleading statements, unfair comparisons, hidden fees or unconscionable conduct.

Is Price Gouging Illegal Under The Australian Consumer Law?

The ACL doesn’t generally cap prices. Instead, it regulates how you represent and charge prices. Several core rules are especially relevant when prices move quickly.

Misleading Or Deceptive Conduct (ACL Section 18)

You must not engage in conduct that misleads or deceives (or is likely to). If a price rise is paired with inaccurate claims-like stating “limited stock” when stock is ample, or implying a “sale” when the price is actually higher than usual-that can be misleading or deceptive conduct.

Examples include:

• “Was/Now” pricing where the “was” price hasn’t been genuinely offered for a reasonable period
• “Only today” or “last chance” claims that aren’t true
• Hiding mandatory fees until checkout (also see component and drip pricing below)

False Or Misleading Representations (ACL Section 29)

It’s illegal to make false representations about price or the existence of a discount or reason for the price. Claims like “supplier costs have doubled” need to be supportable. If they’re not, you risk breaching the ACL’s rules on false or misleading representations.

Unconscionable Conduct (ACL Section 21)

Unconscionable conduct involves exploiting a consumer or small business in a way that’s harsh or oppressive, considering the circumstances. During emergencies, consumers can be vulnerable. Leveraging that vulnerability-for instance, extreme mark-ups for essential goods with no reasonable cost basis-may be considered unconscionable conduct.

Context matters. A justified, cost-based increase is very different from an opportunistic hike that preys on urgent need.

Component Pricing And “Drip” Fees

If you advertise a price, you must clearly disclose any mandatory charges as part of the total price presented. Advertising a low “headline” price and adding unavoidable fees late in the checkout process (“drip pricing”) risks breaching advertised price laws.

Customers should see an honest, upfront total-including compulsory fees, taxes and surcharges-before they commit to buy.

RRP, “Was/Now” And Comparative Pricing

Comparative pricing needs a solid basis. Referencing an inflated “RRP” that is never used in the market or presenting a “was” price that wasn’t genuinely offered can mislead customers. If you reference recommended prices, ensure your use of RRP or MSRP is accurate and not used to create a false sense of discount or urgency.

When Can Higher Prices Be Justified?

There are legitimate reasons to raise prices. The key is transparency and evidence.

• Higher supplier or freight costs: If your input costs rise, it’s often reasonable to adjust retail prices. Keep records (invoices, contracts, shipping costs) that support your decision.
• Limited supply or expedited procurement: Sourcing stock via alternative or faster channels may increase your costs. Document these changes.
• Premium or priority services: Offering a faster service at a higher price is lawful when you clearly explain the difference and don’t mislead.
• Seasonal or dynamic pricing: Surge pricing can be acceptable if it’s clearly disclosed, consistently applied and not used to exploit vulnerable customers.

In B2B or subscription settings, ensure your contracts allow for price adjustments, and that any variation process is fair and clearly communicated. If your template is used with consumers or small businesses, consider the risk of unfair contract terms and ensure your pricing clauses are balanced and transparent.

Practical Steps To Set Prices Lawfully (And Fairly)

A thoughtful, documented approach to pricing reduces legal risk and builds trust with your customers.

1) Build A Clear Pricing Policy

Document how you set prices, when you’ll review them, and how you’ll communicate changes to customers. Include rules for emergencies or shortages so your team isn’t guessing under pressure.

2) Keep Evidence Of Cost Drivers

Maintain records that justify price changes-supplier emails, freight quotes, invoice comparisons, staffing costs, and exchange rate impacts. If the ACCC or a regulator asks, you’ll be ready.

3) Be Transparent In Advertising And Checkout

Present the total price upfront. Avoid hidden or late-stage fees. Check your promotions, “sale” claims and comparison pricing against the ACL rules on advertised price laws.

4) Align Your Contracts And Website

Make sure your customer-facing terms reflect how you price, bill and handle changes. For many businesses, having clear Terms of Trade and robust Website Terms and Conditions keeps your pricing and billing policies consistent across sales channels.

5) Train Your Team

Frontline staff should understand what they can and can’t say about pricing. Train them to avoid promising stock levels or discounts that don’t exist, and to escalate any complaints about price changes quickly.

6) Have A Plan For Complaints And Refunds

Ensure your refund and complaint processes comply with the ACL. Don’t threaten “no refunds” if consumer guarantees apply-this can be misleading and create compliance issues.

7) Monitor Competitive And Market Conditions

Keep an eye on your sector so you can anticipate shifts before they become emergencies. The earlier you plan, the less likely you’ll need to make dramatic last-minute changes that could look unfair.

What Should You Do During Emergencies Or Shortages?

Emergencies change how customers experience and perceive pricing. A carefully considered response helps you stay on the right side of the law and public opinion.

• Plan ahead: Build an emergency pricing protocol that sets thresholds for adjustments and requires senior approval and documentation.
• Prioritise essentials: Consider limits per customer, clear signage, and fair access to essential items instead of aggressive mark-ups.
• Communicate clearly: If prices increase, explain the legitimate reasons (for example, supply chain costs or expedited freight) without exaggeration.
• Avoid opportunism: Hiking prices purely to capitalise on fear or urgency can look like exploitation and may be unconscionable.
• Watch your claims: Don’t overstate shortages (“last units”) or make unsubstantiated comparisons (“cheapest in Australia”) to justify price changes.

Depending on the situation, governments can also introduce sector-specific rules or guidance. Stay across regulator updates for your industry so your team can adapt quickly.

Key Legal Documents To Support Your Pricing

Strong, consistent documentation helps you set prices fairly and communicate them clearly across your sales channels.

• Terms of Trade: Your customer terms should cover pricing, payment timing, discounts, variations and dispute processes. Clear, up-to-date Terms of Trade reduce misunderstandings.
• Website Terms And Conditions: If you sell online, align checkout, surcharges and promotional rules with your Website Terms and Conditions so customers know what to expect before they buy.
• Advertising Rules And Style Guide: Set internal rules for words like “sale”, “was/now”, “limited offer” and “RRP” to avoid inflated claims. Make sure usage of RRP or MSRP is accurate and supportable.
• Promotions And Discount Policy: Define how you run promotions (duration, stock, exclusions) and how you’ll evidence the “was” price.
• Customer Communications Templates: Prepare email and in-store scripts for explaining necessary price rises, so the messaging is consistent and compliant.

If you use standard form contracts with consumers or small businesses, review your pricing and variation clauses for balance and transparency. This reduces the risk of clauses being challenged as unfair under the ACL’s unfair contract terms regime.

Common Pricing Pitfalls To Avoid

Here are frequent mistakes that lead to ACL complaints and investigations:

• Drip pricing: Advertising a low price but adding mandatory fees just before checkout. This can breach advertised price laws.
• False “was/now” claims: Using a “was” price that wasn’t genuine or wasn’t offered for long enough.
• Inflated RRP references: Using RRP to imply a discount when the market never sells at that RRP. Ensure your use of RRP or MSRP is accurate.
• Unsubstantiated shortage claims: “Only 10 left!” when stock is healthy can be misleading or deceptive conduct.
• “No refunds” statements: Blanket “no refunds” signs or policies can mislead customers about their ACL rights.
• Hidden surcharges: Failing to include unavoidable fees in the total upfront price.
• Price changes without notice: For subscriptions or repeat orders, changing prices without a clear contractual basis or fair process can raise concerns under unconscionable conduct or unfair terms.

How To Demonstrate Fairness If Your Prices Increase

If you need to lift prices, supporting documentation and consistent processes go a long way.

• Evidence the change: Link the increase to specific, documented cost drivers (supplier, labour, freight, energy).
• Phase it in: Consider staged increases or temporary measures (e.g. quantity limits) instead of sharp jumps.
• Communicate early: Give reasonable notice where possible, especially for subscriptions or long-term customers.
• Offer options: Provide alternatives (e.g. standard vs express, smaller pack sizes) to maintain accessibility.
• Review messaging: Check your announcements against ACL rules on false or misleading representations.

Key Takeaways

• “Price gouging” isn’t a standalone offence, but pricing practices that mislead consumers or exploit vulnerable situations can breach the ACL.
• Watch your claims and presentation: avoid drip pricing, inflated “was/now” comparisons and unsubstantiated shortage statements.
• Increases are more defensible when they’re backed by clear, documented cost drivers and communicated transparently.
• Align your promotions, checkout and contracts with the ACL-including accurate comparative pricing and honest total prices upfront.
• Strong customer terms and online policies (such as Terms of Trade and Website Terms and Conditions) help you apply pricing rules consistently.
• Prepare an emergency pricing protocol so you can act fairly and lawfully during shortages or spikes in demand.

If you’d like a consultation on pricing compliance for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.