The Office of Fair Trading (OFT) is threatening to crack down on retailers’ pricing practices following a study into misleading pricing.
It is promising action against businesses that engage in practices like so-called baiting sales - where low-priced goods are advertised but not in stock - saying consumers can end up spending more than planned. M&S was accused of engaging in the practice over a champagne offer last week.
The OFT study found 23% of companies in a sample of 4,777 newspaper ads were using reference pricing, where a Sale product is compared to its full price. It is already planning enforcement actions in cases where it believes the reference prices were never widely charged.
It has published a framework that sets out how businesses should act after holding meetings with two thirds of the UK’s major retailers.
OFT chief executive John Fingleton said: “It matters to consumers, who end up losing money, but it also matters to the market. Incentives on businesses get distorted - they end up competing on who can confuse the customer most effectively and effort goes into this, instead of reducing costs and creating innovation.”
BRC director of business and regulation Tom Ironside said: “Discounts and promotions are part of our highly competitive retail market and customers benefit from them.”