OFT aims to ban hidden costs in adverts

The Office of Fair Trading (OFT) is working on proposals that could force retailers to make their adverts reflect the true cost of goods.

The proposals include making retailers add any compulsory charges such as delivery costs to the headline offer price and tougher rules on advertising time and volume-limited offers.

Although it would affect all retailers, the move could have huge impact on online traders and price-comparison sites.

Earlier this year, the OFT commissioned research into various common pricing methods used by online and other retailers. It found that drip-pricing, where additional charges such as taxes and delivery costs are added to a basic price as the sales process progresses, and time-limited offers cause most harm to consumers.

The study found time-limited sales in particular can trigger feelings of scarcity, with consumers more likely to overestimate the product quality, or the value of the deal.

It was also found that volume-limited sales, known as bait-and-switch practice, may have a substantial negative impact on consumers.

With such sales the study found consumers are drawn in to promotions, and where the item is out of stock, they predominantly switch to another item within the same site or store, due to lowered search intentions.

The OFT said: "The proposals do not represent new rules but a suggested starting point for the OFT to use when assessing whether an advertised price promotion breaches the Consumer Protection from Unfair Trading Regulations (CPRs)."

It has now published draft guidance it wishes to discuss with industry. As well as examining if it would be of benefit to consumers to add additional compulsory costs in the headline price, the proposals also cover making traders clearly state the start and end dates or number of products available in time- and volume-limited offers.

Other proposals include ensuring making retailers take “reasonable efforts” to remove an advert once a promotion has ended and for internet traders to make links to advertised deals available directly from their home page.

The OFT has also looked at clearer pricing information on bundled sales such as buy two get one free offers, where the consumer infers there is a saving; even if there is not.