Consumer groups have welcomed new laws forcing businesses to be upfront about prices, rather than pulling people in with a low figure they'll never charge, but say shoppers will still need to be savvy because of loopholes in the legislation.

Under the Trade Practices Amendment (Clarity in Pricing) Act, businesses are now obliged to provide a single figure that shows the total minimum price a consumer will pay for a product or service.

That figure must include any of the "bits and pieces" that necessarily come with a product or service, for which payment can't be avoided.

The classic example is the purchase of a car, where the common practice has been for car manufacturers and dealers to advertise prices that don't include stamp duty and dealer charges. Only once the buyer reaches the showroom do they discover that the true cost of the car may be thousands of dollars more than the advertised "headline" price.

Under the new rules, businesses can still advertise the components of a price such as the headline figure but they must also display, just as prominently, a total price including all the non-optional components, such as stamp duty, GST and any surcharges.

Restaurants that charge more on weekends and public holidays must have separate menus with the more expensive prices for those days, rather than just noting a surcharge in small print.

However, optional extras, such as metallic paint in the case of cars, fabric protection for furniture or a credit card surcharge that won't apply if you pay cash, don't have to be included in the total price. Nor do costs that aren't immediately "quantifiable". An example is the total cost of a rental car if a "per kilometre" charge is involved. In this case the rental company is allowed to advertise something like, "$50 a day plus $1 a kilometre".

The only exception when it comes to the prominence of the display of the total price is when periodic payments such as monthly fees for a mobile phone apply. In this case, the total price still has to be specified but doesn't have to be as prominent as the components.

A partner at DLA Phillips Fox, Geoff Taperell, says the clarity in pricing law means it's now potentially a criminal offence for a business to use imprecise wording such as "only $100 plus GST and delivery", or "just 20 easy payments of $19.95". Breaches of the new laws make a business liable for a maximum fine of $1.1 million.

"The new component pricing rule applies to any representation of a price ... no matter how it's made," Taperell says. That includes advertising, price tags, in-store promotion and quotations.

The Consumer Action Law Centre's (CALC) director of policy and campaigns, Nicole Rich, says her reading of the legislation is that prices quoted over the phone also come under the new rules.

Taperell says other aspects of the legislation to note are that the rules cover only goods "ordinarily acquired for" personal, domestic or household use or consumption so a car is covered but a delivery van wouldn't be.

Similarly, the law doesn't cover business-to-business transactions.

The director of policy and campaigns for consumer group Choice, Gordon Renouf, says the purpose of the new law is simple: "That you won't be brought into the salesman's premises on the basis that something is going to cost $150 when it's really going to cost $175."

Rich says the problem is that research shows and businesses know that once consumers have made a decision to buy they're unlikely to change their mind even if the price ends up being higher than they thought.

"You're already 'invested' in the idea of buying before the other charges are added on," she says.

That's why CALC remains concerned about the decision to specifically exclude delivery costs, such as postage, courier fees and packaging, from the elements that must be included in the total price.

The group argued in its submission on the draft legislation that traders would be "very likely to use it as a loophole" and that in practice "many traders may charge a price for postage and handling well above the actual cost to the trader as a means of circumventing the requirement to advertise a single price".

Rich acknowledges that delivery costs may not always be quantifiable as they may depend on the buyer's location but she says that circumstance is already covered by the legislation.

"It will be used for avoidance," she says. "Consumers should be vigilant about checking delivery charges before deciding they want to buy something."

Consumer groups also have concerns that the rules around what's quantifiable and not quantifiable may be used to come up with misleading prices.

A rental car company might keep its daily headline rate low but load up its per-kilometre charges, for instance.

Renouf is optimistic that the consumer's preference for flat rates will deter this sort of "smart" pricing.

"The message is you should still understand all the costs of whatever product or service you're buying and think carefully about what your usage is going to be, so you know what the cost will be all up," he says.

Consumers also need to be aware that the financial services industry is exempt.

Anyone with concerns about a business's compliance with the new laws should contact the Australian Competition and Consumer Commission Infocentre on 1300 302 502. Also see accc.gov.au.

The true cost of cars

Some car manufacturers, including BMW and Toyota, have taken price lists down from their websites as a result of the new legislation but consumer groups say that far from discouraging comparison shopping, the move reduces the amount of misleading information being given to potential purchasers.

Some contributors to a BMW "addicts" forum couldn't see how the new laws would work for cars - "too many variables involved"- while others disliked the recommended retail prices that didn't include "a few K [thousand] more for dealer delivery and another 5K for stamp duty".

Another post commented: "The Government wanted more transparency but now it's made it even harder to get the information or price comparisons on the net."

However, Gordon Renouf of consumer group Choice says: "What we have had is misleading information and I think it's good that manufacturers have removed misleading information from their websites."

He believes manufacturers will eventually come around to advertising the "true" cost of cars, perhaps after negotiating standard prices and charges with dealers.