‘Was £500, now half price!’
When consumers see these offers in retail outlets, they can easily be swayed into parting with their cash because they believe they are grabbing a bargain.
The Office of Fair Trading is the organisation that controls and maintains consumer protection. They have recently begun investigations into the use of misleading reference pricing by high street retailers.
Recently, there was a Court case against Tesco regarding the price of strawberries and the fact that they were on ‘offer’ for longer than they were full price. The reason the Claimant won this case is because Tesco were breaching consumer rights by misleading the customer into thinking that they are purchasing the items on offer.
If Tesco had initially marketed the strawberries at the on ‘offer’ price then they feared they would not have sold as many units as the price would not have been so appealing to the customer.
The Office of Fair Trading is investigating ‘reference pricing’. This refers to offers which aim to demonstrate value to customers by including a reference to a higher, past or future price for the same product.
Most retailers make use of reference pricing as a sales tactic. Many retailers use reference pricing during seasonal sales and some use reference pricing on an on-going basis. Usually, to draw the customer in further, the labels (and webpages) may show a price or number of previous prices scored through.
The reason that reference pricing is a concern to the Office of Fair Trading is because it creates a potential to mislead customers as the original reference price was not a genuine selling price for the particular product.
The Office of Fair Trading has created a number of priority factors to address this year. One is to prevent retailers from avoiding investigation by establishing a product at a higher reference price in a small number of stores on a lower shelf and then advertising a much lower price across all the stores. Another is to prevent retailers from marketing a reference price as a discount for longer than the period of time the higher reference price was charged.
The current stories in the media, highlight the issues that the Office of Fair Trading are facing with ensuring that customers are protected. The Office of Fair Trading is not going to let the retailers get away lightly.
If you have any queries regarding Consumer Law, please do not hesitate to contact us on 01536 276300 or use our online enquiry form.
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