OFT is to investigate ecommerce and behavioural targeting

The Office of Fair Trading (OFT), the UK consumer protection watchdog, has indicated that it will investigate internet advertising techniques and online pricing tactics that mislead consumers.

As part of its brief it will also include price comparison sites and the increasing application of behavioural targeting in relation to online advertising.

An outcome of the investigation could result in an industry code of practice on advertising and pricing if the OFT finds significant evidence of misleading, unfair or unethical behaviour being employed by online retailers.

Advertising and pricing policies detrimental to consumers!

In a statement the OFT said, “The study will look at the current consumer law surrounding advertising and pricing and will evaluate which advertising and pricing practices are most detrimental to consumers, taking into account the growth of the use of the internet for online shopping, information provision and advertising.

“At this stage we are minded to include several pricing practices which may lead to consumer detriment such as: ‘Drip’ pricing tactics, where consumers only see an element of price upfront but price increments ‘drip’ through during the buying process; ‘Baiting’ sales which entice consumers with promises of discounts but then have very few items on offer at the sale price; Reference prices, that is, price promotions which create a relatively high reference price compared to sale price; [and] Time limited offers such as sales which finish at the end of the month or special prices which are available for one day only.

Not only an internet problem

Some of the above areas of concern are not specifically or only internet related and can be seen in many other areas of high street retailing. ‘Baiting’, ‘high reference pricing’ and ‘time related’ promotions are seen up an down the high street, bill-boards and on TV.

An example is retail furniture outlets continually advertising discount pricing, sales, high pricing with 50%+ off, all before it ends on Thursday at 8pm or some other arbitrary time not too far off.

It’s become so prevalent that it’s become a part of many a stand-up comedians routine. Who said there is no such thing as bad publicity?

There is a fuller analysis here on Out-Law.com
The full details of investigation is here on OFT website

Behavioural Targeting (BT)

It may be that BT, in relation to advertising, is itself being targeted as it is perceived as unethical, manipulation or reducing choice and in some cases.

The OFT said, “We are also considering including the use of personal information in advertising and pricing. In particular, we may look at behavioural advertising where information on a consumer’s online activity is used to target the internet advertising they see. We may also examine the practice of tailoring prices to individual consumers on the basis of their personal data”.

It is not new or only prevalent on the internet. Advertisers have been targeting and using demographics since the dawn of advertising, evidence which is the range of magazines, newspapers, publications targeting particular socio-economic groups, all of which their readers can be categorised on the basis of their ‘personal’ profiles.

What actually constitutes personal data?

Browsing history, content consumed, interest shown or the sort of data users of social media sites often provide.

Perhaps the real issue is the willingness of some/many internet users to provide the personal data on which so tightly targeted ads can be focused.

Like all technologies it can be used for benefit or gain depending on the motivation for its use. Regardless of whether highly targeted or not, advertising, itself, can be used to manipulate, form opinion and even mislead!