OFT to test e-commerce contracts for fairness

Out-Law News | 09 Feb 2010 | 11:09 am | 1 min. read

Consumer protection regulator the Office of Fair Trading (OFT) has launched an investigation into whether complex contracts for goods and services are unfair to consumers. The investigation will particularly focus on online transactions.

The OFT will study how well consumers understand typical contracts and how the presentation of contracts changes their comprehension. It will look at whether understanding is affected by the presentation of contracts in writing, online, face-to-face or over the phone.

The investigation will focus on uncovering any practices that intentionally deceive consumers, and will concentrate on online transactions.

"Today consumers are offered a range of complex contractual arrangements, particularly for goods and services offered online," said the director of the OFT's Consumer Market Group Heather Clayton. "We often see situations in many different markets where people lose out as a result of not understanding contracts."

"We want to understand the cause of these problems and look for remedies that will not only protect consumers, but also help those businesses that are trying to provide clarity to their customers," said Clayton.

The OFT said that submissions are due by 31 March and that it would seek responses directly from Government departments and consumer bodies.

The OFT is already investigating online business practices. A report is expected this spring on its investigations into behavioural advertising and into pricing policies which change the price according to the customer.

Differential pricing attempts to use a person's browsing history and any demographic information collected about them to change the price charged for goods or services.

The OFT is also investigating the practice of 'drip-pricing', where the initially advertised price is increased with other compulsory charges as a user progresses through the online buying process.

Consumers are protected from unscrupulous businesses by the Consumer Protection from Unfair Trading Regulations.

The OFT said that a growth in internet retail had prompted its action. "We would … like to update our understanding to take account of developments such as the increasing number of contracts entered into online, which may change how contracts are used and understood," it said in a statement.

It said that the investigation could lead to ordering retailers to create and abide by a code of practice; making recommendations to Government; taking action against particular companies; or asking the Competition Commission to conduct a full investigation.