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OFT warns retailers over pricing tactics

Report highlights harmful techniques that are misleading consumers

02 Dec 2010

By Sharecast

Interior of a Tesco supermarket

(SHARECAST) - The Office of Fair Trading (OFT) is getting tough with retailers it accuses of misleading consumers with confusing offers such as "buy one, get one free".

Pricing techniques used by both high street and online retailers are tricking customers and tempting them to spend more than they would otherwise.

A report published by the OFT highlights one practice – drip pricing – as particularly harmful as optional or compulsory costs, such as credit card and delivery charges, are added during the buying process.

Time-limited offers, such as "offer ends today", and baiting sales – where only a small proportion of stock is available at the advertised offer price – are also criticised, although whether they are actually breaking the law depends on the advert and other factors.

The OFT has published a new framework setting out the criteria used against traders engaged in pricing practices causing most harm to shoppers.

Companies that include all compulsory charges in the headline price and make details of all optional charges available early in the buying process "are less likely to be subject to OFT enforcement action".

"Misleading pricing is not only bad for the consumer, it is also bad for competition, and creates an uneven playing field between fair dealing businesses that stick to the spirit of the law, and those that push the boundaries too far," OFT chief executive John Fingleton said.

"We urge all firms to review their pricing practices and to get their houses in order where necessary."

But the British Retail Consortium (BRC) does not think shoppers have anything to worry about.

"Customers aren't stupid. They make sophisticated judgments about prices and value within stores, between stores and over time, and have all the information they need to do that," said the BRC's director of business and regulation Tom Ironside.

"Discounts and promotions are part of our highly competitive retail market and customers benefit from them."

And the shops are generally law-abiding, he says.

"They want satisfied customers who come back again and again," Ironside said. "They would have nothing to gain from attempts to mislead and any extra legislation or over-enforcement on this issue would therefore be pointless. Enforcement activity should be directed at those who deliberately set out to mislead."

 

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