Is it OK to charge for a component or service that is fully available in a free version?
<p>Suppose I am a television manufacturer. I produce TVs that can (and do) show High-Definition broadcasts as well as standard definition broadcasts.</p>

<p>For marketing purposes, I clearly state that all my TVs can show HD broadcasts - my question is: Is it legal for me to charge a additional premium for HD viewing, even though the entire functionality already exists in a non-premium version? Any smart person reading the literature would realise that the TV already supports HD, but a less-smart person - let's say they're ripe for the picking.</p>

<p>Or alternatively, is there any stupid-person-protection-laws that prevents me from selling identical items at two different prices by advertising specific features, even though from the business point of view, the premium is pure profit?</p>

<p>I agree with @feetwet that the risk is consumer protection laws that prohibit <em>false and misleading conduct</em>. I disagree with the conclusion that what your question proposes isn't <em>false and misleading conduct</em> because you told the truth.</p>

<p>Putting aside the fact that there is a clear <em>intention</em> to mislead (a slam dunk for the regulator); the test for <em>false and misleading conduct</em> is not if you told the truth, it's if a reasonable person in the circumstances would be misled. IMO the conduct you propose is misleading.</p>

<p>For example, in Australia the supermarket giant Coles was prosecuted for advertising bread rolls as "Fresh baked in-store" and "Baked today, sold today". In fact, the rolls were made in Ireland and par-baked there, frozen, shipped to Australia, thawed and then finished baking in store. Technically they told the truth, however, the ACCC thought it was deceptive, a reasonable consumer would expect that the whole process had taken place on site. The <a href="https://www.accc.gov.au/media-release/coles-to-pay-25m-for-misleading-baked-today-and-freshly-baked-in-store-bread-promotion" rel="nofollow">Federal Cour</a>t agreed with the ACCC and imposed a $2.5 million fine.</p>

<p>That said: if you are not engaging in deceptive and misleading conduct you can charge different prices to different consumers for the same product. Car yards do this all the time - a consumer who is a good negotiator will get a better price than one who is not.</p>

<p><em>If you don't make any false or misleading claims</em> I don't believe there is any law or regulatory agency in the free world that would prohibit this.  Since I can't prove a negative, here is a broad analogy followed by a fun anecdote:</p>

<p>There are plenty of products that are functionally equivalent but where the price charged is entirely determined by the labeling.  In the U.S., "store-brand" (a.k.a. white-label) products are often literally the same as the brand-name products that may be stocked immediately adjacent to them.  I.e., they come off the same production line, and the only difference is the packaging.</p>

<p>Bottled water might be another great example.  Especially water that is filtered and remineralized, as opposed to (maybe) spring water.</p>

<p>Now the fun but perhaps not perfectly related example: You can cripple a product to sell it at different prices: Intel famously segmented the market for its processors with its 486 CPU: It was offered in a DX version, which had the full functionality, and a cheaper SX version, which started as a DX chip to which extra manufacturing steps were applied in order to disable the math co-processor.  So even though the SX cost (marginally) more to manufacture, it was sold at a lower price because it had been crippled.</p>

consumer-protection