Was $199, now $79? How the FTC's deceptive pricing guides treat former-price ads

Price-drop headlines are everywhere: a "was" price, a manufacturer's list price, or a claim that the same item costs more elsewhere. The Federal Trade Commission's Guides Against Deceptive Pricing, in part 233 of 16 CFR, describe when those comparisons are legitimate and when they can mislead a shopper.

Former-price comparisons

16 CFR 233.1, former price comparisons(a) says one of the most commonly used forms of bargain advertising is a reduction from the advertiser's own former price. If that 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. "Where the former price is genuine, the bargain being advertised is a true one."

If, on the other hand, the advertised former price is not bona fide but fictitious — for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction — "the 'bargain' being advertised is a false one; the purchaser is not receiving the unusual value he expects." In that case, the "reduced" price is, in reality, probably just the seller's regular price.

A former price is not necessarily fictitious merely because no sales at the advertised price were made. 16 CFR 233.1, former price comparisons(b) still tells the advertiser to be especially careful that the price is one at which the product was openly and actively offered for sale, for a reasonably substantial period of time, in the recent, regular course of business, honestly and in good faith — and not for the purpose of establishing a fictitious higher price.

Comparisons to other retailers

Under 16 CFR 233.2, retail and comparable-value comparisons(a), an advertiser may offer goods at prices lower than those being charged by others for the same merchandise in the advertiser's trade area, on a temporary or a permanent basis, but "the advertised higher price must be based upon fact, and not be fictitious or misleading." The advertiser should be reasonably certain that the higher price does not appreciably exceed the price at which substantial sales of the article are being made in the area — "that is, a sufficient number of sales so that a consumer would consider a reduction from the price to represent a genuine bargain or saving."

The guide's own example: if a number of the principal retail outlets in the area are regularly selling Brand X fountain pens at $10, it is not dishonest for a retailer to advertise: "Brand X Pens, Price Elsewhere $10, Our Price $7.50." It is misleading, the next paragraph says, to advertise a "Retail Value $15.00, My Price $7.50" when only a few small suburban outlets charge $15 and the larger outlets in and around the main shopping centers sell the pens for $7.50 to $8.

List prices and "suggested retail"

16 CFR 233.3, list or suggested retail prices(a) notes that many members of the purchasing public believe a manufacturer's list price, or suggested retail price, is the price at which an article is generally sold. If a reduction from this price is advertised, many people will believe they are being offered a genuine bargain. "To the extent that list or suggested retail prices do not in fact correspond to prices at which a substantial number of sales of the article in question are made, the advertisement of a reduction may mislead the consumer."

The guides are in 16 CFR part 233. They are FTC guidance on how the Commission views these claims, not a substitute for the full text or for legal advice. When you see a "was" price, ask whether that price was a real asking price for a reasonably substantial recent period — not a number invented for the sale tag.

Published November 13, 2026. We do not use affiliate links on this page; see our Affiliate Disclosure.

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