We’ve all seen seething consumers – or been seething consumers – who learned that a prominently advertised offer didn’t reflect what they would actually have to pay. Playing fast and loose with price is a sure-fire way to put shoppers’ wallets in lock-down mode. That’s why savvy retailers are transparent in their practices.
Decades of FTC law enforcement offer practical guidance to help ensure your customers are clear about what something will cost:
1. If that great deal depends on a consumer taking additional steps – for example, applying for a rebate – it’s unwise to focus your advertising solely on the “after” price.
2. Exercise care before describing something as “free.” The FTC has brought stacks of cases in which advertisers have enticed buyers with “free” offers without clearly disclosing it was a short-term trial that would result in further shipments – and recurrent credit card charges – if consumers didn’t take affirmative steps to cancel. That kind of stealth negative option is likely to land marketers in the middle of the law enforcement radar screen.
3. For online sellers, the Restore Online Shoppers’ Confidence Act (ROSCA) specifically bans negative option features unless you:
- clearly disclose all materials terms of the deal before obtaining a consumer’s billing information,
- get the consumer’s express informed consent before making the charge, and
- provide a simple mechanism for stopping recurring charges.
4. Some advertisers have tripped themselves up by trumpeting in the headline best-case-scenario or post-rebate prices or payments that are actually available only to a select few or in limited circumstances. What about burying the nitty-gritty truth in fineprint footnotes or behind vague hyperlinks? As .com Disclosures suggests, don’t even think about it.
5. An FTC conference and staff warning letters have advised businesses of the risks of “drip pricing” – the practice of advertising only part of a product’s price and revealing other charges as the customer goes through the buying process. Businesses interested in earning customer loyalty take steps to make sure that people understand up front what they’ll actually have to pay.
Of course, companies have a lot of leeway in how they structure a transaction, but the bottom line is that consumers need to know what the bottom line will be. A new post on the FTC’s Consumer Blog educates shoppers about ads and store signs that factor future discounts, reward offers, or other promotions into the purported price. The message for consumers is vigilance – and the word for retailers is transparency.