The 24-Can Lot and the Vanishing No-Fee Promise
Auction house owner Lena advertises a weekend sale with the headline "No buyer's premium - pay the hammer price." At checkout, every invoice adds an 18% buyer's premium and a 3% charge for credit cards. In the fine print of a flyer, the premium is described as a "administrative charge," and the card fee is disclosed only after the card is swiped. One lot consists of 24 identical cans of tomatoes. The shelf tag says "$2.00 each or 3 for $5.00," and a unit-price sign says "$0.083 per can." Lena sells the entire lot as one unit "times the money" at $2.00 per can, producing $48.00. The tag also says "Est. retail $59.99," although the cans are dented and near their use-by date. A buyer complains that the multi-buy price should have applied and that the reference price is misleading.
1. Are the buyer's premium and card fee permissible, and how should the advertised "No buyer's premium" claim be evaluated?
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Mandatory charges must be disclosed clearly before the buyer bids, and the advertised price must be accurate. A headline stating "No buyer's premium - pay the hammer price" followed by an 18% charge at checkout is a price-accuracy problem even if a flyer later calls the charge an administrative fee. Renaming a premium does not change its function. The 3% card fee is also problematic if it is disclosed only after the card is swiped; buyers cannot make an informed decision if the total price appears only at payment. The auction house should state the total cost structure in the listing and at registration, including whether the fee applies to all payment methods or only cards. If the sale was advertised as no-premium, the house should honor that representation for buyers who relied on it or clearly correct the error before bidding. At minimum, the advertised price must include or clearly disclose mandatory charges.
2. How should the 24-can lot be priced under the tag and unit-price information? Show the competing calculations and explain which result is defensible.
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The tag offers two prices: $2.00 for one can and 3 cans for $5.00. The unit-price sign at $0.083 per can corresponds to $2.00 each, not to the multi-buy price. The multi-buy price produces $5.00 ÷ 3 = about $0.1667 per can, or $40.00 for 24 cans. Selling "times the money" at $2.00 per can produces $48.00, which ignores the advertised 3-for-$5 offer. The buyer is entitled to the benefit of the advertised multi-buy price unless the auction clearly announced before bidding that the multi-buy did not apply to a lot sold as a single unit. Because the shelf tag and unit-price sign created the pricing representation, the defensible approach is to honor the lower advertised price for the 24 cans, $40.00, and correct the unit-price sign. The auctioneer cannot use a checkout convention to override the displayed price without clear pre-sale notice.
3. What is the problem with the "Est. retail $59.99" reference price, and what should Lena do about it?
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A reference price must be bona fide and substantiated; it cannot be a fabricated or inflated comparison used to make the auction price look like a bargain. Here the goods are dented and near their use-by date, so a $59.99 estimated retail value is especially suspect unless Lena can show that the same or comparable goods actually sold at that price in the relevant market and time period. The reference should identify what is being compared and should not imply a regular retail price if the item is distressed or outdated. Lena should remove the $59.99 claim unless she has written substantiation, replace it with a factual description of condition and date, and correct the unit-price sign to match the multi-buy offer. She should also preserve the advertising and tag records in case the complaint is reviewed.