OFT may examine privacy in online ad review

The Office of Fair Trading has launched a market study examining online advertising and pricing that will also consider privacy issues. The goal of the study is to clarify and update the OFT’s understanding of consumer harm that may arise from potentially misleading marketing and pricing.

The OFT is currently consulting with the industry and will announce the full scope of its study in the Autumn. But it has already stated that: “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.”

The regulator also says it is “minded to look at the use of opt-in or opt-out boxes”, especially where these are used on annual renewals, add-on charges or agreements to pass data to third parties. Differences between online and offline practices are likely to inform the scope of the study.

At the heart of the review is the potential detriment to consumers from practices such as “drip pricing”, where consumers only see part of the price upfront and experience incremental increases through the buying process, or “baiting sales”, where discounts are promised on items of which there are very few available.

Also definitely included in the review are unrealistically high reference prices, time-limited offer, and complex pricing that make it difficult to understand the base unit cost, such as “three for two” offers or non-inclusive pricing. The review may lead to recommendations to Government, the Competition Competition or for better self-regulation.

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