The retail industry has dismissed Prime Minister Andy Burnham’s plan to crack down on so-called “rip-off discounts” to help people tackle the cost of living crisis, with the group that represents major businesses insisting it is simply not a big issue.
According to the Government, shoppers have increasingly complained about retailers artificially inflating prices to give a false sense of value, such as increasing them only to then immediately advertise “discounts” to make savings look larger than they really are.
Officials claim this includes discounted prices being the same as they were before the discount, intended to trick consumers into thinking they are getting good value while saving them nothing and creating an uneven playing field for honest competitors.
A consultation will launch this autumn to assess whether tactics such as fake “was” prices, invented discounts and misleading recommended retail prices (RRPs) should be added to the list of practices banned under the Digital Markets, Competition & Consumers Act (DMCCA).
Under current laws, it can be difficult for enforcers to take on these cases. Adding these tactics to this list would mean they will automatically be considered unfair, making it easier to crack down while making rules simpler for businesses to follow.
The Government estimates its initial crackdown on unfair business practices could save consumers around £400m a year.
But the British Retail Consortium, which has more than 200 members, including Amazon, Asda, Boots, Aldi, Tesco, Sainsbury’s, Marks & Spencer and Waitrose, played down the extent of the current problem.
Director of business and regulation Tom Ironside told Reuters: “BRC members adhere to all rules and regulations on promotions, ensuring consumers benefit from genuine savings on the discounts offered.”
The Prime Minister also wants to see an end to subscription traps, where people find it hard to cancel their subscriptions and contracts are automatically renewed at a higher cost. New rules will now come into force in January 2027, in time for when customers often start new subscriptions for the year ahead.
The changes will mean businesses will need to provide clearer up-front information, regular reminders and a much easier exit to contracts. A new 14-day cooling-off period will also let consumers cancel after a trial or long-term contract renews.
The Government claims there are around 155 million active subscriptions in the UK, with consumers spending an estimated £1.6bn a year on ones they do not actually want.
Downing Street insists certain charitable memberships for cultural and heritage organisations will be excluded from the new subscription rules, given the unique role they have in preserving and opening up access to the nation’s history, landscapes, and cultural collections.
Burnham said: “I know people are sick and tired of rip-off discounts and subscription traps. Westminster has got used to telling people that everyday hassles like this are just part of life. I don’t think that’s right, especially when the cost of living continues to weigh heavily on so many people’s lives. I’m determined to pull every single lever we can to provide people with some room to breathe on the cost of living.
“We’re putting an end to phoney bargains. If something is advertised as half price, it should actually be half price. We’re also making it as easy to leave a subscription as it is to join.
“These are just two of the everyday fixes we’re going to be rolling out – today is just the start. We want to put more money in people’s pockets and give people hope that politics really can work for them and their everyday lives.”
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