The Office of Fair Trading is to conduct two seperate investigations into online pricing practices. The UK trade watchdog will be examining price comparison websites, while a separate study will look into a series of activities like “drip pricing”, where charges and extras are added during the purchase. The second study will also look at customised pricing, where prices are individually tailored using information collected about a consumer’s internet use. Also under the microscope will be so-called “reference prices”, where there is a comparatively high reference price compared to the sale price.
The OFT gives the example of an offer on an item that “was £50, now £20”, or “50% off”.
It will also scrutinise time-limited offers, such as sales which finish at the end of the month or special prices which are available for one day only, as well the role of price comparison sites which may use some of the questionable practices.
The OFT hopes to complete the investigations by summer 2010.
Other pricing practices going under the microscope include baiting sales, where a company advertises discounts to attract visitors whilst having few items actually on sale, and ‘complex pricing’ where it is difficult for a consumer to assess an individual price, such as with three-for-two offers.
OFT senior director Heather Clayton hopes that the investigation will help to protect customers while allowing firms to compete freely.
“These studies will ensure that we keep up to date with the latest development and how new pricing and advertising practices are emerging and evolving online,” she said.