OFT targets 'misleading' online retail advertising

The Office of Fair Trade (OFT) is set to investigate potentially dodgy advertising practices by retailers, especially over the internet, saying companies could face enforcement action if they breach consumer law.

The consumer watchdog yesterday announced it was to study pricing practices, "which may potentially mislead customers," particularly online. It has also launched a separate study into the way companies can target consumers with online advertising.

Heather Clayton, OFT senior director, said: "It is very important that the OFT's approach to potentially misleading practices remains well-informed by a sound evidence base, so we effectively protect consumers while allowing firms to compete freely."

The outcomes of the studies run from giving the market "a clean bill of health," to an "investigation and enforcement action against companies suspected of breaching consumer law," the OFT said. It can also call in the Competition Commission to investigate.

The OFT will look into pricing practices including "baiting sales," where a retailer offers only some products on a discount, with customers ultimately buying a full-priced product. Other issues include "reference prices," where companies inflate the original price of goods to suggest a big discount.

Time-limited offers, with special offers running out at the end of the month or available "for one day only" are also under scrutiny. The OFT said it would run the slide rule over price comparison sites as well and expects to complete the study by next summer.

The regulator will also study online targeting of advertising and prices, which involves tailoring advertising to internet users based on the web pages they have previously used. It expects to complete the study into the practice by spring next year.