The Office of Fair Trading (OFT) is to look into potential misleading adverts and their effect on consumers, with a particular focus on the internet.Set to launch this autumn, the watchdog will evaluate which online and offline pricing and advertising practices have potential to be most detrimental to consumers. It will also look at the practice of behavioural advertising – targeting adverts according to people’s web surfing habits. Heather Clayton, senior director of the OFT’s Consumer Market Group, asked business and consumer groups to come forward with suggestions for areas the study should examine. “The way that businesses advertise and price goods and services constantly evolves, and we need to keep up to date on how consumers view these adverts, and the types of advertising and prices which may mislead,” she said.
The main areas of pricing practice the OFT will examine are:
– ‘Drip’ pricing tactics, where consumers only see an element of price upfront but price increments ‘drip’ through during the buying process.
– ‘Baiting’ sales which entice consumers with promises of discounts but then have very few items on offer at the sale price.
– Reference prices, that is, price promotions which create a relatively high reference price compared to sale price, such as ‘was £50, now £20’, half price, 50% off, or £20 compared to a recommended retail price of £50.
– Time limited offers such as sales which finish at the end of the month or special prices which are available for one day only.
– Complex pricing where it is difficult for consumers to assess unit price, for example three for two or ‘non-inclusive’ prices where lots of separate (often necessary) components are needed to generate a final price.
The market study is expected to commence in the autumn, and comments are invited before 18 September.