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Competition Bureau on the Lookout


Travis Cramb

Competition Bureau on the Lookout for Fake Scarcity and Drip Pricing

The Competition Bureau recently released its latest Deceptive Marketing Practices Digest, and it's all about online shopping tricks.  The Bureau is cracking down on two sneaky practices: 

  1. Fake Scarcity: These are claims that make you think a product or service is in short supply.  For example, you might see a pop-up saying there are only two hotel rooms left for your chosen dates, and lots of other people are looking at the same site. It creates a sense of urgency and pressures you into making a quick decision without shopping around.  

  2. Drip Pricing: This is when a low price is advertised, but then extra fees or charges are added later, making the actual price higher than what was shown.  It's especially shady when these fees are not mandatory government charges, like sales tax. 

Scarcity cues play on our fear of missing out.  Businesses use tactics like saying only a small amount of stock is left, or that the price is only available for a limited time. They might even use countdown timers to make you feel like time is running out.  These tricks can be misleading and push you into making a rushed decision.  

The Bureau gives examples of false scarcity cues to watch out for, like an online retailer using an inventory counter that's not accurate or a hotel booking platform claiming a room is almost booked when other visitors are interested in different dates. 

According to the Bureau, these claims about limited availability can have a big impact on our buying choices.  They're considered important if they can make us do something we wouldn't have done otherwise. 

Drip pricing is when they advertise a price that's impossible to get because they add extra charges later.  Last year, the Competition Act made drip pricing illegal as a deceptive practice. 

The Bureau doesn't need to prove it's deceptive anymore when going after cases involving drip pricing.  However, the law only covers fixed additional charges and fees, not ones that change depending on certain factors. 

The Bureau warns that variable fees can still be a problem if they create a false or misleading impression.  Drip pricing is a top priority for the Bureau, so businesses need to be careful with their online pricing claims.  They should make sure they don't mislead customers about the true cost of a product or charge more than what was advertised. 

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