Rod Sims, the Chairman of the ACCC, this week laid out in a speech to the CEDA conference the priorities for the organisation for 2014. Included in the priorities is attention on drip pricing:
Drip pricing involves the incremental disclosure of fees and charges over an online booking process. It causes both competition and consumer detriment.
Consumers see a ‘headline’ price advertised at the beginning of the booking process but when they progress to the payment phase, additional fees and charges have been added. Consumers purchasing airfares or sporting event tickets are all too familiar with this practice. Drip pricing involves a lack of transparency which may mislead consumers, and it can also make it difficult for businesses to compete on a level playing field.
Drip pricing can also exist where a customer signs up for a product expecting the price to be X and subsequently, once using the product, that the price is Y. Y pricing could be a mandatory annual fee that was not adequately disclosed in the initial sale process and that is not clearly documented in any contract.
We see this in the POS software space – where customers find that the cost of ownership of software is much higher than as represented in the sales process.
We will watch with interest engagement by the ACCC on this.