An investigation is set to be launched by the Office of Fair Trading into online pricing practices.
Part of the investigation will focus on price comparison websites, which make claims to offer the best deals. It will also look into a procedure called “drip pricing,” where added charges are included as the purchase progresses.
Customised pricing, where a consumer’s internet usage is analysed and used to form a price.
The investigation is being welcomed by Which? Magazine, who feel that many companies are using tactics on the web that wouldn’t be accepted elsewhere.
Matthew Bath, the technology editor for Which? told the BBC, “with some of the extras that are added while you’re buying online, it’s like someone accompanying you on your weekly shopping and adding products into your basket without your knowledge.”
“We think consumers should be aware of the final price from the beginning.”
The investigation is set to be thorough, with the following pricing practices set to be looked into:
· Drip pricing – customers are given part of the price immediately, but as the purchasing process continues, added optional and compulsory charges begin to mount up; a practise which is seen when purchasing flight tickets, hiring cars and buying insurance.
· Complex pricing – when companies provide offers, where it is difficult to assess an individual price. Three-for-two offers and ‘free’ add-ons are some of the methods used, and supermarkets, mobile phone companies and computer shops are seen to operate similar tactics.
· Reference prices – where businesses such as cruise sales, furniture sales, and supermarkets increase a price in order to offer an even bigger discount.
· Time-limited offers – carpet sales and furniture sales often promote sales prices that only last until the end of the month or for one day.
· Baiting sales – when a company displays discounts in order to lure customers into the store, but don’t have many items at that price.
Heather Clayton, the senior director for the Office of Fair Trading expects the investigation to result in greater protection for the customers.
She went on to say, “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.”
The investigation is set to be complete by the middle of 2010.
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