The Department of Consumer Affairs has issued a warning against drip pricing.
About Drip Pricing:
- Drip pricing is a pricing strategy where firms initially advertise only part of a product’s price, revealing additional charges as the customer progresses through the buying process.
- This technique is distinguished from partitioned pricing because it introduces extra costs, such as delivery, service, or booking fees, later in the transaction, rather than displaying them upfront with the base price.
- It commonly attracts customers with a low advertised price, but as they proceed, the total cost increases due to these additional fees.
- Various industries employ drip pricing, including internet sellers, automobile dealerships, financial institutions, and rental car companies. Recently, restaurants have also begun using this method more frequently.
- The method complicates price comparison, leading consumers to often pay more than they expected. This not only undermines price transparency but also affects their ability to make efficient purchasing decisions.
- Due to its deceptive nature, drip pricing is considered a “dark pattern” under the Guidelines for Prevention and Regulation of Dark Patterns, 2023. These are tactics that mislead people into paying for items or services they did not initially intend to purchase.
- By obscuring the full price, it encourages customers to spend more than planned, hindering competition and disadvantaging businesses that practice transparent pricing.
Ref: Source
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