Six high street carpet and furniture retailers are under investigation for using artificially high prices to exaggerate sales and price cuts.
The Office of Fair Trading (OFT) says it opened the investigation after finding retailers were misleading customers into thinking they were getting a bargain by artificially inflating the original price. (See our Haggle on the High Street guide for help in knocking prices down.)
It found "systematic" examples of artificially-inflated reference prices. These included "was" prices formerly charged by the retailer, "after sale" prices that the trader intended to charge in the future, or recommended retail prices (RRPs) set by the manufacturer.
The OFT is not naming the six firms involved, as it hopes to reach a speedy resolution with them.
But it found that across the six companies, just 5% of items had been sold at their reference price. And on some products, no sales at all took place at the artificially-inflated price.
In all cases, there was no explanation as to how retailers came up with these prices.
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'Ask sales staff about prices'
The OFT has written to the six retailers asking them to stop using these practices, giving them until autumn to respond.
OFT director Gaucho Rasmussen says: "OFT research has found that reference pricing can mislead consumers into thinking the item they have bought is of higher value and quality, pressure them to buy there and then so they don't 'miss out' on the deal and also impair their judgment, as buying an item immediately means they do not get the chance to search the market for the real best deals.
"This bank holiday sale season we would recommend consumers ask sales staff when and for how long the reference price was used and also how many sales they achieved at this price. This will help them to determine whether they are getting a good deal."