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OFT to scrutinise online pricing

Online pricing practices are to be investigated by the Office of Fair Trading (OFT).Price comparison websites which claim to give the best deals will be examined in one study focusing on prices.

It will also look at activities such as "drip pricing", where charges and extras are added during the purchase.

Another study will look at customised pricing, where prices are individually tailored using information collected about a consumer's internet use.

The OFT hopes to complete the investigations by summer 2010.

The pricing practices going under the microscope include:

• Drip pricing - where consumers only see an element of the price upfront and end up paying much more due to optional or compulsory extras. This could include products sold by airlines, car hire firms and insurance companies

• Time-limited offers - such as sales that finish at the end of the month or last for one day only. Carpet stores and furniture sellers could be representative of this practice, the OFT said

• Baiting sales - where a company advertises discounts to attract visitors whilst having few items at that price on sale

• Reference prices - artificially inflating the pre-sale price of an item in order to make the discount look more attractive. This could refer to companies offering cruises, selling furniture or to supermarkets

• Complex pricing - where it is difficult for a consumer to assess an individual price, such as with three-for-two offers and 'free' add-ons. Mobile phone companies, supermarkets and computer stores could fall into this category.

OFT senior director Heather Clayton hopes that the investigation will help to protect customers while allowing firms to compete freely.

"These studies will ensure that we keep up to date with the latest development and how new pricing and advertising practices are emerging and evolving online," she said.

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