OFT launches online pricing investigation'Drip pricing' put under the microscope

15 October 2009

Online shopping

Shopping online can be convenient and cheap

Online advertising and practices including 'drip pricing' are being investigated by the Office of Fair Trading.

The research will look at the way prices are advertised and will cover hidden online charges, including the practice of drip pricing.

Which? editor Martyn Hocking said: 'Anyone who's bought a budget flight or gone for an insurance quote online will have come across drip pricing. 

'The advertised price soon balloons as you add 'optional' extras but it's hard to see how some of these charges are avoidable. If these companies are so confident that their prices are the cheapest, why not just advertise the likely total amount in the first place?'

Concert ticket sales

An OFT spokesperson said: 'We’ll look into the sale of concert tickets (though not exclusively) where you start with one figure and the price goes up and up. Often there are charges you can’t opt-out of.'

Use of cookies

The research into online targeting of advertising will look at so-called behavioural advertising. This includes examining the use of cookies, small text files that store information about you, to build a profile of your shopping habits and interests.

The OFT spokesperson added: ‘We will look into anything that builds a profile of what you like to buy and where you like to shop, and sells that information on, and whether this has a derogatory affect on consumers.'

Tailored pricing

The OFT will also look into the practice of offering tailored prices depending on what you've previously bought - this results in two people visiting the same website seeing different prices for the same item.

In addition the OFT will investigate:

• baiting sales, where only some products are available at the discount price,
• reference prices, where there is a relatively high reference price compared to sale price,
• time-limited offers,
• complex pricing, (for example 'three-for-two' offers),
• price comparison sites which may use some of the practices described above.

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