OF T rules on retailer discount practices
The Office of Fair Trading has urged businesses to review the way they use multibuy offers as part of a clampdown on misleading price promotions.
It says retailers need to ensure they comply with fair trading laws, or risk facing enforcement action.
A list of pricing practices which it says have the most potential to mislead consumers has been drawn up and will be used by the OFT to determine which cases that are brought to its attention should be prioritised.
Drip pricing, where the full cost is not made clear to the consumer at the outset – such as delivery costs for mail-order or online purchases – are considered to be the most likely to mislead consumers into what the OFT terms “shopping errors”.
Reference pricing – such as “was £9.99, now £5.99” – and volume offers such as three-for-two are both included, though the OFT is keen to point out that not all such promotions should be considered misleading or unlawful.
OFT chief executive John Fingleton said: “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.
“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.”
The OFT report said: “Volume offers can have powerful effects even when they do not represent good value because they may play on a consumer’s desire to obtain a ‘good’ deal and unrealistic assessments of needs.”?It said that 81% of consumers would like the advertised multibuy price to state the cost per item and two-thirds would “like to see the average individual price each item was on sale for during the month prior to the offer”.
Multibuy discounts were found to increase sales by up to 40% more than single-unit promotions of the same value.