Industry in race to advise on scope of OFT probe

Industry bodies and major online brands are racing to prepare submissions to fight their corner ahead of the Office of Fair Trading’s investigation into online advertising and pricing practices.

Key industry bodies have just 21 days to submit their views and advise on the scope of the OFT’s Advertising and Pricing market study, which aims to “clarify and update the understanding of consumer harm that arises from potentially misleading advertising and pricing”.

The study will take in online practices including price comparison sites, drip-pricing and potentially behavioural targeting. It could lead to government-led regulation, legislative changes and even investigations by the Competition Commission.

The OFT claims the study is to bring the office up to date on how consumers view ads and the types of advertising and prices which may mislead.

But online industry experts have questioned both the timing – a 21-day response period at the tail-end of the summer – and the relevance of further legislation, suggesting stronger enforcement of the current legislation would be of more benefit to the industry.

Marina Palomba, legal director at the Institute of Practitioners in Advertising (IPA), said, “There are more than sufficient laws and regulations already in place. The Advertising Association will speak with the OFT on behalf of the industry as a whole to respond to the study.

“What may be more valid is for the OFT to look into rogue traders online and the prosecution of these offenders for the damage they cause to legitimate businesses,” she added.

Ian Williams, MoneySupermarket’s director of communications, said the price comparison site had already held discussions with the OFT.

“We welcome anything to increase trading standards within the price comparison sector. We believe we’re among the better few but we’re aware of some that might not be giving consumers as good an experience,” he said.

Williams added that although MoneySupermarket is tightly regulated, there could be scope for greater intervention.

“There may be a question about whether price comparison sites themselves should be regulated; they’re not at the moment,” he said.

John Holmes, principal economist at consumer lobby group Which?, questioned the outcome of the OFT study. “My question would be what exactly could be done following completion of the study?” he said. “There’s concern that government-led regulation can’t keep up with a fast-moving commercial sector.”

It’s thought the industry response will focus on highlighting its ability to self-regulate and call on the OFT to take a stronger enforcement role.

Zuzanna Gierlinska, head of Microsoft Media Network at Microsoft Advertising, said the study implies self-regulation isn’t gaining the respect of governmental bodies.

“We’re already far ahead with regulating and protecting the sector. The IAB’s good-practice principles offer transparency and are already well represented,” she said. “Digital is a fast-moving industry. Regulation through government is something we try to steer away from because there are always new advances. Our approach is self regulation.”

The head of regulatory affairs at the Internet Advertising Bureau (IAB), Nick Stringer, said the trade body will respond to the OFT, and in particular “highlight the ongoing work we and our members are doing around online privacy and behavioural advertising, specifically the IAB good-practice principles, which seek to give users greater transparency and control over the collection and use of information for behavioural advertising.”

David Ellison, marketing services manager at ISBA, said, “We have confidence in the progress self-regulation has made in this area and are pleased that the Digital Britain report supported behavioural targeting, as long as it protects user privacy and is built on user trust.”

Ian Maude, analyst at Enders said, “21 days seems a little short. It should be a longer process. Ultimately the commercial model depends on consumer trust in the system. If some service providers aren’t doing that, then this may help the industry and consumers. If the end result is a clear set of rules, then that’s a good thing.”

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