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OFT warns retailers over misleading price offers

OFT warns retailers over misleading price offers

Category: Money

Updated: 03/12/2010
First Published: 03/12/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Retailers have been warned that they should not be misleading consumers with over complicated price offers. The warning comes after the Office of Fair Trading (OFT) looked into the issue of price offers.

The regulator said that while it acknowledged that advertising of prices is a key component of price competition which benefits consumes and the economy, it was concerned that certain practices can lead to people making purchases they would not have done if the pricing had been more clear.

One of the price offers the OFT is worried about is 'drip pricing' where other charges are added during the buying process such as taxes, card and delivery charges.

Other techniques that have the potential to mislead customers include time limited offers, where customers are warned that offers are only available on a certain day or for a certain time, and bait pricing, where a small amount of stock is advertised at a low price to get customers through the door.

Other price frames examined by the OFT were reference pricing, such as 'was £100, now £60, and multiple unit promotions, such as 'three for two'.

Retailers adopting such tactics have been urged to review their pricing practices to ensure they comply with fair trading laws.

Firms that refuse to do so have been warned they could face enforcement action from the OFT.

"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," said John Fingleton, chief executive of the OFT.

"We urge all firms to review their pricing practices and to get their houses in order where necessary."

However, the British Retail Consortium (BRC) has said that a number of promotional deals helps households in challenging times and that consumers expect to find special offers and discounts when they shop.

"Customers aren't stupid. They make sophisticated judgements about prices and value within stores, between stores and over time and have all the information they need to do that," Tom Ironside, BRC director of business and regulation, said.

"Discounts and promotions are part of our highly competitive retail market and customers benefit from them."

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