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OFT to scrutinise online pricing OFT to scrutinise online pricing
(40 minutes later)
Potentially misleading online pricing practices are to be investigated by the Office of Fair Trading (OFT). Online pricing practices are to be investigated by the Office of Fair Trading (OFT).
In one study the OFT will look at deals, such as three-for-two offers, where it is difficult for the consumer to assess prices. Price comparison websites which claim to give the best deals will be examined in one study focusing on prices.
In a separate study it will analyse how companies use information about a consumer's internet use to tailor individual prices. This report will also study activities like "drip pricing", where charges and extras are added during the purchase.
Another study will look at customised pricing, where prices are individually tailored using information collected about a consumer's internet use.
The OFT hopes to complete the investigations by summer 2010.The OFT hopes to complete the investigations by summer 2010.
Practices going under the microscope include: Other pricing practices going under the microscope include:
• Drip pricing - where cumulative charges and supplements are added throughout the buying process • Time-limited offers - such as sales that finish at the end of the month or last for one day only
• Baiting sales - where a company advertises discounts to attract visitors whilst having few items actually on sale• Baiting sales - where a company advertises discounts to attract visitors whilst having few items actually on sale
• Reference prices - artificially inflating the pre-sale price of an item in order to make the discount look more attractive. • Reference prices - artificially inflating the pre-sale price of an item in order to make the discount look more attractive
• 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.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."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.