How traders mislead consumers with fake sales and discounts
When a business makes price reduction announcements, they must display the lowest price a product was on sale for in the previous thirty days, and base the discount on this price alone. Picture: iStock
Who doesn't love snagging a bargain? Consumers however need to beware of the risk of being misled by unscrupulous retailers. Last week, the Competition and Consumer Protection Commission (CCPC) drew attention to the pitfalls of navigating sales and discounts.
Kevin O'Brien, a member of the CCPC, urged consumers to be cautious and to know their rights. “A discount must be a real discount,” he says. “The CCPC will not allow businesses to mislead consumers into thinking that they are getting a better deal than they actually are.”
The commission told businesses planning their winter sales that they will be watching to ensure sales discounts are genuine and consumers are not misled. This announcement follows the introduction of new rules last year on price reductions, and comes as many businesses plan their Black Friday and end-of-year sales campaigns.
“The Price Indication Regulations set out clear-cut requirements for the use of discounts. Most announcements such as ‘sales’ prices, ‘special offers’ or ‘Black Friday offers’ that create the impression of a price reduction fall within the scope of the rules.”
By law, when a business makes price reduction announcements, they must display the lowest price a product was on sale for in the previous 30 days, and base the discount on this price alone.
As the enforcement body for these and other consumer protection laws, the CCPC keeps a close eye on the market. Late last year and early this year, the CCPC undertook an analysis of pricing data from a number of retailing websites.
Kevin O’Brien again: “Our analysis has shown a number of concerning pricing practices and demonstrated that a number of traders had not yet changed their practices around price reduction announcements following the introduction of the new rules last year.”
For example, when making an announcement that a product has been reduced in price, traders must show the prior price of the product. This is the lowest selling price applied to the product in at least the last 30 days before the price reduction has been applied.
The CCPC has observed that traders frequently did not do this, and offer this example:
Suppose a product is priced at €1,649 from 23 December 2022 to 24 January 2023. On 25 January 2023 until 8 February 2023, the price of the product is increased to €1,949. On 9 February 2023, the price is reduced to €1,579 with an indicated prior price of €1,949 in the price reduction announcement, despite the lowest price in the previous 30 days before this reduction being €1,649.
If a trader increases the price of a product for a single day before immediately reducing the price back to its previous price, the trader can’t use this briefly-increased price as the prior price in its price reduction announcement as this is not the lowest price in at least the previous 30 days.
Where a trader applies consecutive reductions to the selling price of a product as part of a sales campaign, the prior price is the lowest selling price applied to the product in at least the last 30 days before the first price reduction.
The prior price has to remain the same for all successive price reduction announcements during the campaign, provided the price reductions are applied gradually without interruption as part of the same sales campaign.
Under those recent changes to the Consumer Protection Act 2007, a commercial practice is misleading if it would be likely to cause the average consumer to be deceived or misled, or make ‘a transactional decision that the average consumer would not otherwise make’. This includes ‘the provision of false, deceptive or misleading information in relation to the existence or nature of a specific price advantage.’
The CCPC has found that some traders apply a price reduction for an excessively long period of time compared to the period during which the product is sold without a price reduction.
For example: Suppose a product is priced at €79.99 for two months, then the price is reduced to €49.99 and remains there for 10 months. The product is then the subject of a price reduction announcement with an indicated prior price of €79.99, though the reality is that it hasn’t been this price for the bones of a year.
You can also get situations where the trader pulls numbers out of the air to make a discount look better. Suppose a product price is reduced from €1,699 to €1,499 on 24 December 2022. The price reduction announcement on this date features only a recommended retail price of €2,799, even though the product was never actually offered for sale at this price.
“It is an offence to breach these regulations,” says Kevin O’Brien. “Up until now, the CCPC has been engaging with businesses to inform them of their new obligations. Businesses have been given ample opportunity to get their house in order. This engagement phase is now over and sales pricing is now an enforcement priority for the CCPC.”
“Our market monitoring is ongoing and we will be particularly active in the coming months as we build towards the busiest shopping months of the year. If we find any offers which mislead consumers, we will be engaging with businesses and taking enforcement action where necessary.”
When it comes to online shopping, consumers also need to be aware of how unscrupulous online retailers try to manipulate you into making choices that you wouldn’t otherwise make. The practices — known as ‘dark patterns’ — tend to work on a subconscious level and fall into a number of different categories.
The first is the activity message. This basically tells you what other people are doing on the website — how many views this product has had and so on, in order to give the impression that it’s in demand, and that, by extension, if you don’t get moving, you’re going to lose out.
Then you have the related high-demand message. Same idea, same impact.
Next is the low-stock message. It’s going fast! Get your skates on!
Nagging is among the most irritating of the dark patterns. You’re trying to buy something and suddenly you’re hit by pop-up after pop-up, inviting you to join an email list or take similar action, when all you want to do is locate the product you wish to buy. Frequently, you’d need a magnifying glass to spot the little ‘x’ you need to hit to shut these pop-ups down.
False hierarchy happens when there are two options available, but one is made to stand out more through its placement, size or colour.
The next one they call ‘confirmshaming’. This is where the option to decline is worded in such a way as to try to make you feel foolish: ‘No I don’t want to make any savings today’.
Confusion has always been a useful tool for scam artists. Online sellers have also been known to use confusion or unclear language in order to make it difficult to opt in or out.
Finally you have the countdown timer beloved of ticket sellers. This one is particularly insidious given the de facto monopoly that exists in this particular area of the market. Again, the intent is unequivocal. Follow through or you lose out, big time.
