Pricing techniques used by retailers can be misleading to customers, according to a report published today by the Office of Fair Trading (OFT).
Evidence obtained by the OFT from consumer surveys, focus groups, psychology literature and groundbreaking behavioural economics suggests that advertised prices can disguise the full cost of items from the buyer.
Consumers often complain that they would not have made specific purchases if they had known the full price of an item when they placed their order.
Although not necessarily illegal, the practices most likely to cause harm to consumers are drip pricing (where additional charges such as tax, card charges or delivery charges are added during the transaction), baiting sales (which limit the amount of stock for which an offer applies) and time-limited offers.
John Fingleton, OFT CEO, commented: “Pricing practices, used in a transparent and fair manner, can provide consumers with a helpful shortcut to assess whether a particular offer is a good or bad deal.
“However, our research has highlighted how certain pricing tactics can be used in a misleading way.”
This research will be used by the OFT to adjust how it applies the Consumer Protection from Unfair Trading Regulations, brought into law in 2008.
A new framework has been published by the organisation which explains the criteria it will use in prioritising enforcement action against traders engaged in pricing practices causing the most harm to consumers.
Fingleton added: “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.
“We urge all firms to review their pricing practices and to get their houses in order where necessary.”