OFT takes on airline online prices and comparison sites

Thursday, 15 October 2009 09:47

Firms advertising low headline prices that rise when it gets to the checkout are being investigated by watchdogs.

The Office of Fair Trading (OFT) is looking at 'drip pricing' - where price increases 'drip' through during the buying process as a part of a wider study into online advertising and sales.

It is also looking at 'baiting sales' where a small number of products are available at a discount price but many customers pay the full price in the end.

Airlines are commonly criticised for these for these practises - with low fares advertised but only limited to a small number of seats of certain unpopular flights and prices pushed up by added fees.

Other industries being looked at include car hire, ticket sales and insurance.

The OFT is keen to emphasise it is not targeting individual firms but tactics that could be derogatory to consumers.

Heather Clayton, OFT senior director, said: "These studies will ensure that we keep up to date with the latest developments and, in particular, on how new pricing and advertising practices are emerging and evolving online.

"It is very important that the OFT's approach to potentially misleading practices remains well-informed by a sound evidence base, so we effectively protect consumers while allowing firms to compete freely."

The watch dog is also looking at offers that finish at the end of the month or for one day only, claims such as 'was £50, now £20', or '50% off', and complex prices.

Insurance, mobile phones and supermarkets are all being looked at for complex pricing.

Price comparison sites that use these practices will also be investigated - to see if they are returning quotes on products that do not include requested add-ons.

A further study will look at behavioural advertising and customised pricing, where prices are individually tailored using information collected about a consumer's internet use.

This could range from recommendations from sites like Amazon based on your shopping habits to where cookies are downloaded unknowingly to monitor your online habits and firms sell on this information to retailers.

In some cases, if enough information is held it is possible you may be emailed offers after visiting sites or by visiting a website you are offered certain products.

The outcome of the investigation could be a further market investigation from the Competition Commission and enforcement action against companies suspected of breaching consumer or competition law.

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