The Office of Fair Trading (OFT) has despatched warning letters to scores of leading online businesses threatening action unless they are more transparent about how they collect customer data to offer personalised pricing.
The move follows a probe by the regulator into the issue launched last year, triggered by fears that online businesses have been using the data they collect through cookies and other software to set prices higher.
The OFT said that it would keep under review whether businesses are transparent enough and would consider enforcement action against the firms if it finds “evidence of misleading or unfair practices”. It has written to 60 leading online firms about the issue.
In a statement it said: “Our evidence indicates that businesses are not using information about individuals to set higher prices to them. Rather, they are offering personalised discounts, and increasingly using information collected about consumers in order to refine their pricing strategies.
“However, we were disappointed with the level of transparency by businesses about what information they were collecting and how it is used,” the watchdog added. “Businesses could do a lot more to make their practices more transparent about what information they are collecting, how it is being used and give consumers real choice about this.”
The OFT said it has some concerns about personalised pricing, such as if “consumers cannot easily avoid personalisation if they wish to …; consumers do not know it is occurring, or consumers cannot easily see prices paid by other customers “.
Simon Entwisle, director of operations at the Information Commissioner’s Office, said that businesses operating unfair personalised pricing activities may also find themselves being slapped down by the data watchdog.
The ICO has the power to issue fines of up to £500,000 against organisations that breach the Data Protection Act or Privacy and Electronic Communications Regulations.
“Businesses need to be open about how they’re using customers’ information,” Entwisle said. “The OFT’s work reminds businesses how to get this relationship right, and informs our own guidance on this issue.”
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