The consumer watchdog is suing Coles and Woolworths over allegations the major supermarkets misled customers by offering “illusory” discounts.
While those claims are set to be tested in court, there are a slew of other practices retailers and service providers use to take advantage of shoppers, many of which don’t get caught by current consumer protections.
Consumer advocates say Australia’s laws lag the US, UK and EU when it comes to unfair trade practices, which means shoppers have to be alert.
Here are five practices to look out for.
Add-ons
It’s the online equivalent of “do you want fries with that”?
During an online purchase, retailers now regularly suggest extra products to complement a purchase.
The sophistication of those systems is improving, with online furniture stores among those now using artificial intelligence to suggest add-ons that will tempt shoppers.
Consumer advocates say automated add-ons – where items are added at checkout without a customer’s express consent, such as extended warranties on appliances or expedited delivery programs – cross the line.
“That type of thing is quite underhanded and can catch people out,” says Choice’s deputy director of campaigns, Andy Kelly.
“Extended warranties don’t provide much more than what the law already provides for anyway so you could be paying for something that you are not going to get a whole lot of value from.”
There have also been examples of add-ons that are designed to give consumers the impression they are getting a good deal that have resulted in prosecutions.
Last year, Dell Australia was fined for making misleading representations about discounted prices for monitors that could be “bundled” with a computer purchase at the checkout.
More than 5,300 monitors were sold to consumers with overstated discounts, which the company had to remedy after conceding it had misled customers.
Subscription traps
Many consumers have experienced the grim feeling of having a payment come out of their bank account for a subscription service they no longer use.
According to Erin Turner, the chief executive of the Consumer Policy Research Centre, it’s good practice for companies to let subscribers know when a fee is about to be charged, along with instructions on how to cancel.
“That’s what a respectful relationship looks like with your customers,” Turner says.
“It’s not hoping that people don’t remember that you’re giving them a service. That is not a good business model.”
Subscription traps are high on the list of consumer grievances, and the method of signing customers up to them can be murky.
Some retailers add “free” subscriptions to an online basket, with auto-renew fees turned on, which can come back to haunt the consumer later on.
Others make it tricky to cancel.
Home improvement platform hipages, which connects trades people with customers, conceded last year it did not adequately disclose contract terms that allowed it to automatically renew subscriptions and charge an early termination fee for those looking to cancel.
Countdown clocks
Some retailers and accommodation providers pressure shoppers into making premature buying decisions by using countdown clocks or notifications that other people are looking at an item the customer has their eye on.
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In reality, there’s a good chance another countdown sale is happening soon, and there’s probably plenty of that product or service to go around.
“There’s a lot of dark patterns, manipulative design techniques used to create false urgency or scarcity,” Turner says.
“They’re all designed to create this sense that you’re going to lose out if you don’t purchase quickly.”
The usual test of authenticity is whether the sales tactic is alerting customers to a genuine offer or insight into selling conditions, or whether it’s just being used to create artificial time pressure.
Drip pricing
“Drip pricing” refers to extra fees and charges added during an online purchase that makes the cost much higher than the initial advertised price.
This has traditionally been used in travel, food delivery, accommodation and ticketing industries and varies from annoying to misleading and illegal.
It is such a big issue in the US, which refers to the additional costs as “junk fees”, that it prompted the White House to recently describe the charges as a means to “obscure true prices and dilute the forces of market competition that are the bedrock of the US economy”.
Kelly says companies need to be upfront about the fees they are charging.
“If they’re not telling you that there’s a booking fee at any point until you get to the very end, then it’s probably not OK,” he says.
“You can get a shock right before you’re about to make your purchase, but there’s a danger you just go through with it because you’ve already spent so much time getting to that point.”
Store credits
If you’ve returned an item because you’ve changed your mind, a store credit might be an appropriate goodwill gesture by the retailer.
But if there’s a significant problem with the product or service, customers should ask for their money back, Turner says.
“If something’s gone wrong, if you didn’t get what you paid for, if it’s broken, if it doesn’t do what it’s meant to do, you should be able to get your money back – not a gift card, not a credit, not a promise,” Turner says.
Qantas was heavily criticised for its use of Covid credits dating from the extensive cancellations and border closures that came during the early pandemic.
After intense political and public scrutiny, it changed its policies to remove expiry dates on the use of credits and started offering customers refunds.
Some companies prefer to give credits and gift cards rather than a refund because they know some consumers won’t get around to using them, while others will use them as part of a bigger purchase.
“Quite often the first thing you’re offered won’t be what you’re owed under the law,” Turner says. “And it’s on you to then go back and say, ‘no, I want a refund’.”
