Government vows to crack down on hidden online fees – what will it mean?

Rishi Sunak has announced plans to crack down on hidden online charges to help with the cost of living.

The Government has proposed a series of new measures to combat fake reviews, confusing labels and hidden fees in products ranging from train tickets to food deliveries.

The consultation, which launched today, will ask consumers and businesses their thoughts on a range of online practices that are harmful to customers.

We have a look at the main proposals and whether it will bring down the cost of living.

A new consultation will look at the hidden charges consumers are forced to pay online 

Scrap hidden fees and drip pricing

When it comes to online shopping, customers can often find products at a discount but they may also be faced with huge, unexpected administrative fees for things like concert or train tickets.

The Government has today published research into so-called drip pricing and hidden fees. 

These are fees that are introduced after the customer has started shopping, this includes things like booking fees that are revealed – or dripped – just before checkout.

More often than not, consumers are ‘baited’ into choosing a product because of the low base price, before there are further fees added.

The research found the use of drip pricing is widespread and occurs in more than half of providers in the entertainment and hospitality industry. 

Transport and communication sectors are among the worse, with almost three quarters of providers using this pricing model.

Examples include long-haul flight tickets being sold without luggage, which is then charged as an optional fee later on in the process. 

It also includes products like phones that are sold without charging cables, or printers being sold with ink cartridges, which are then sold as an optional fee

In total, it costs UK consumers £1.6billion online each year, according to government data.

Current legislation requires businesses to provide consumers with upfront, clear and complete information about the price and any additional charges. 

Any businesses that make misleading omissions may be committing a criminal offence.

Now the Government says it wants to strengthen the law on drip pricing in particular, and is consulting on whether further intervention is needed.

Clearer labelling

There has been criticism that the labelling of certain promotions, like multibuy discounts or lower prices for customers with loyalty cards, is unclear.

Tesco recently came under fire for its ‘misleading’ Clubcard prices following a report by consumer group Which?

It reported the supermarket to the Competition and Markets Authority claiming it did not provide detailed unit pricing on its loyalty card offers.

New proposals will simplify unit pricing, which makes retailers display the total selling price and total unit price so consumers can compare similar items.

As part of this, the Department for Business and Trade has put forward proposals to reform the Price Marking Order (PMO) to ensure unit pricing is consistently applied, including across promotions and loyalty schemes.

There are also plans to evoke some parts of the current guidance so that unit prices for all products must be displayed by kilogram, litre, square metre, cubic metre or number.

Where items are sold by weight or volume, retailers will be asked to pick one measure and apply that across all comparable products.

Sarah Cardell, chief executive of the CMA, said: ‘This consultation follows recommendations from the CMA to government to tighten the rules on how everyday items are priced on supermarket shelves as well as our work tackling fake reviews online.

‘We’re very pleased to see this getting underway and it’s an important step toward clearer rules and greater transparency for people when shopping around for goods and services.

‘We’ll feed into this consultation and continue our work in these areas, which we’ll be updating on later this year.’

Put an end to fake reviews

The Government is also looking to stop fake online reviews as initially announced in the Digital Markets, Competition and Consumers Bill.

Kevin Hollinrake, minister for Enterprise, Markets and Small Business said: ‘When reading reviews of products and services you should have confidence that the review is a genuine one and not created by a company ‘bot’ trying to rip you off.’

Quite often, traders can pay or incentivise people to submit reviews that aren’t genuine. 

They may use positive fake reviews for their own products or pay for negative fake reviews to be posted on a competitor’s products to gain an advantage.

Nine in 10 UK consumers report reading reviews and they can help consumers make better informed decisions. 

As a result, the Government wants to ensure the authenticity of online reviews as a result.

Research published last year showed that for the nine most frequently used shopping platforms, an estimated 11-15 per cent of all reviews were fake.

What’s more, consumers can’t spot well-written fake reviews and were 3.1 per cent more likely to purchase a product when exposed to them.

The Government now wants businesses to have policies in place to better allow consumes to report suspicious activity. 

They have made it clear that it the proposals are unlikely to result in businesses being subject to enforcement action on the basis that they publish a single fake review.

This post first appeared on Dailymail.co.uk