Deceptive pricing is a method in which traders use deceptive means such as “original”, “former”, or “regular” pricing quotes for the bulk of a season to mislead prospects and customers into thinking that they’re paying less money for products. The Federal Trade Commission prohibits companies from using such deceptive practices towards consumers.
4 Deceptive Pricing Practices to Avoid
- Former price comparison
- Drip pricing
- Pressure selling
- Strikethrough pricing
Nowadays, when market competition is high, brands resort to different methods to attract the attention of customers. This includes various methods of marketing or pricing practices to drive the interest of as many people as possible and thus increase revenue. Many of these methods are against the law and violate consumer rights. Such practices may be subject to enforcement action so it is critical to be aware and avoid them. We’ll consider the most popular practices to avoid when buying products from different brands.
Former Price Comparison
In this case, a retailer offers a bargain on certain items by informing customers that its price is lower than a previous one. The company proves that the product is "discounted" by placing the inflated former price to show the difference.
This practice means only a part of a product's price is advertised with the total amount revealed at the end of the purchasing process. Additional costs such as local hotel taxes, booking fees, or resort fees are often not included in the ad or “dripped.”
This deceptive pricing practice is often associated with the hospitality industry: airlines showing the price of a ticket excluding some mandatory fees, hotels not including local taxes, etc.
Some companies use emotional manipulation, limited-time offers, and long monologues from sales reps to make people buy products. High pressure can help generate more sales and increase revenue. However, these manipulative steps are illegal and violate customers’ rights.
Cross-out or strikethrough prices are presented in the form of pricing comparison to attract the attention of consumers. Saving is made in comparison to the manufacturer’s recommended retail price. Companies use strikethrough pricing to win more customers since they see a tangible reduction in price.
There are many types of pricing practices that mislead customers into thinking that they obtain items for a lower cost. We've mentioned the most popular that you can see in everyday life. Now let’s find out how to fight these deceptive actions.
How to fight deceptive pricing
Sometimes you may overpay because of the deceptive pricing practices used by some retailers use. However, fighting back can feel impossible since these actions are hard to prove. As soon as you notice that some of the retailers are breaking the FTC rules, you can take several measures.
- Collect evidence. The first thing you need to do is to collect all sorts of evidence that indicate there was price deception. It may be anything that can prove the deception by the seller: advertising in a newspaper or magazine, a TV commercial, post on social media, etc. You need to get a recording, screenshot, or an article in the newspaper that supports your claim.
- Submit a complaint. As an option, you can file a complaint to the FTC, an independent agency responsible for consumer protection. You can submit it online by following the instructions or reach an agent by phone. Yet there is no guarantee that this organization will investigate your case and return your money if you’ve overpaid.
- Ask for a refund. If a company acted unfairly towards you, as a consumer you have the right to ask for a refund. Firstly, contact customer service by using live chat, email, or calling them. Explain the situation and ask them to resolve it. If they don’t react to your complaints, you can also use social media to prevent other people from getting into the same situation. Many retailers avoid this scenario as it may damage their reputation. So they will help you with your problem quickly.
Now that you know how to fight deceptive pricing and defend your consumer rights, let’s proceed to the examples.
Deceptive Pricing Examples
Many cases demonstrate brands misleading customers into believing that they’re buying products at a discount. The price may remain the same or even increase. This can happen due to a price increase before a discount or additional mandatory payments. So let’s consider several examples where deceptive pricing occurred.
This industry is often associated with drip pricing. Airlines may show discounted ticket prices but exclude baggage fees, seat selection fees, taxes, and other costs required to travel. Hotels show the prices on rooms without including local taxes or resort fees.
May D&F department store
In 1989, the Colorado Attorney General's office accused a unit of the May Department Stores of practicing deceptive advertising in its home department. Since 1986 May had used exaggerated former prices as a basis for comparison against prices after a discount.
Since deceptive pricing practices arise quite often, you need to be able to identify and unravel them. Consider the three steps above to protect your rights and fight deceptive pricing.
- The article “6 Online Deceptive Pricing & Sales Practices To Avoid!” on the Internet Legal Attorney site recommends avoiding several deceptive pricing practices mentioned in the article.
- The article “Playing Fair: Avoiding Deceptive Pricing Practices” on JD Supra provides readers with several types of deceptive pricing and outlines actions to help improve price transparency.
- The article “Five misleading pricing tactics to avoid in sales” on the Which? site provides five pricing methods people should avoid.
Last Updated: 22.03.2023