Wednesday, 28 August 2013

Misleading offers: too profitable to quit

A recent article in the Guardian nicely points out that even though certain unfair commercial practices may be prohibited in Europe, even if such a prohibition is then enforced by national consumer protection agencies and courts against a particular trader, this may not discourage other traders to continue using such practices. (OFT crackdown on dodgy deals won't stop retailers from cashing in) No. 7 on the blacklisted unfair commercial practices by the Directive 2005/29/EC is to falsely create an impression that a particular product will be sold only for a limited time or that it will be available at a specific price for a limited time. I'm sure many of our readers were confronted with signs in shops stating 'Final sale', '70% off everything', etc. Often the 'final sale' sign is displayed for weeks, and prices showed as discounted are rather original goods' prices (since they often apply to goods for longer than the 'original' price). Such practices are used to mislead consumers into thinking that they have to buy a product rather than miss on a really good deal and unfortunately consumers tend to be very easily led into such a reasoning. The Office of Fair Trading in the UK had a few successful cases against traders making such misleading claims, e.g., recently Tesco was fined for displaying strawberries' price as half-priced, while these strawberries were sold at original price for only two weeks, and at a discounted price for more than three months (Plucky pensioner costs Tesco £300,000 in victory from beyond the grave). Unfortunately, often the profit made from such controversial sale practices will be much higher than a potential fine placed on a trader by the authorities. In the Tesco case it is estimated that the profit the company made from the sale of 'not-really-discounted' strawberries was 8 times higher than the fine. It seems, therefore, that we may have reached a stalemate in consumer protection. Unless the enforcement agencies and courts would control more of the market for such practices and be willing/ have authority to take away all of their profit (if not more), it is hard to see why the traders would start complying more with unfair commercial practices rules.

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