BBC expert said retailers now risk breaching consumer laws after two high profile recent cases
A BBC expert has explained there are new rules being enforced now which come into action when you get to the till for any online purchase. Appearing on BBC Morning Live Radio 4 Money Box expert Dan Whitworth said the annoying design of websites which adds on large amounts to ‘offers’ when you finally get to pay.
He said in fact hidden fees are illegal – and now the Competition and Markets Authority (CMA) is clamping down. Earlier this month, it was announced that StubHub has been fined £889,200 by the UK’s competition watchdog for not showing people additional fees on tickets until they got to checkout.
The live event ticket marketplace will also have to refund more than 50,000 customers with an average payout of £10.33. The Competition and Markets Authority (CMA) was investigating the platform as part of a drive to clamp down on illegal and unfair online pricing practices.
It found that StubHub was using an illegal practice known as drip pricing, which can cause fans to be caught out by extra charges and means they may not have had a chance to accurately compare prices between sellers.
Mr Whitworth said: “Drip pricing is when you might get drawn in by an initial price and think, oh, okay, £50. Yeah, that looks really good. By the time you’re at the checkout, it’s £60, £70 or whatever. So, all these added on these hidden fees, these fees that are drip priced in and basically stop hub certainly obviously got the huge big fine but it says it’s happy to work with the CMA.
“It says the hidden fees on its platform were an isolated platform error and that it’s not part of its business model and as a result of that because it’s working with the CMA it’s had its fine reduced. Mark’s Electrical is another company that’s been pulled up on this. It was fined £720,000, and this is something for pre-selecting and charging customers extra without their agreement. You know those little tick boxes, sometimes you might get on the checker if they’re, you know, and obviously the idea is you tick them if you want them.
“If they’re pre-selected for optional extras, well, that’s not part of the rules. So, that’s what they got in trouble for.” In a similar case Marks Electrical broke consumer law by using pre-ticked boxes to automatically charge customers for extra services and was ordered to pay a £720,000 fine and £600,000 in customer refunds.
New rules around timers, pre-selected boxes, and not showing running totals of costs are now being enforced – and consumers are being told to ensure they are being carried out.
The CMA has written advisory letters to more than 100 firms, and has also started cases and investigations against eight companies. He explained: “You might talk to your friends or, you know, you might think to yourself, ‘Oh, this is a bit of dodgy practice.’ No, it’s illegal. It’s breaching consumer law. And so there the CMA, the Competition Markets Authority, it’s released some advice to clear up what it describes, and it recognizes a bit of a gray area.
“So any additional charge, and this is where the CMA is very clear, any additional charge must be displayed upfront. So, delivery fees, booking fees, VAT, anything that you have to pay to get the product must be displayed clearly.
“Now, the same goes for these pre-selected boxes, and we’ve mocked up a bit of an online checkout picture here. So, these little pre-selected boxes, which you have to tick, well, they shouldn’t. So, if it’s, for example, warranties, if it’s insurance, if they’re optional, if it’s not necessary, they should not be pre-selected.“
Mr Whitworth said people should also be given a running total of costs now, and warned sites against using timers before an offer runs out. He added: “If it’s a sale that ends at midnight, it genuinely ends at midnight. You can tell the consumers that that’s useful, but you know, if you go off the website, then you come back back and the timers all of a sudden reset. That’s pressure tactics. That’s something the CMA does not like.”
