OFT investigates six furnishing stores over discount claims: Firms accused of inflating prices to exaggerate cuts Watchdog criticised for revealing details of inquiry
(Guardian (UK) Via Acquire Media NewsEdge) The Office of Fair Trading is to investigate six furniture and carpet retailers, including Carpetright and sofa specialist ScS, over exaggerated discount claims.
The retailers are accused of inflating prices for short periods in order to mislead shoppers into believing they are getting a bargain during sale periods. The announcement came before the bank holiday weekend, when many furniture and carpet retailers are holding sales, and is another blow for an industry struggling while the housing market has been in the doldrums.
The OFT said an initial investigation had found systematic inflation of the original price, known as the "reference price", to show customers what a good deal they are getting. Typically, just 5% of products were sold at the artificially inflated reference price, while a significant number of products were found to have never been sold at that price level.
Although the OFT did not officially name the retailers under investigation, ScS and Carpetright both confirmed they had been contacted by the OFT this week. Carpetright said in a statement that it "strives to operate fully within all laws and regulations at all times. Carpetright is co-operating fully with the OFT and will respond to the letter in due course."
The other retailers are thought to be Dreams, DFS, Furniture Village and Steinhoff, the owner of Harveys and Bensons for Beds. DFS, Dreams and Steinhoff declined to comment. Furniture Village said it was aware of the OFT investigations but added that it would be inappropriate for it to comment or confirm its involvement until its findings were published. It said: "Furniture Village is fully supportive of any initiative which ensures that, industry-wide, future pricing policies and practices are fair and accurate."
Gaucho Rasmussen, an OFT director, said: "OFT research has found that reference pricing can mislead consumers into thinking the item they have bought is of higher value and quality."
He said the exaggerated discount claims also pressured shoppers to buy immediately so they did not miss out, and could impair their judgment so that they did not search for better offers. "We would recommend that 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," said Rasmussen.
The British Retail Consortium queried the way the OFT had handled the revelation of its investigation. The industry trade body suggested the watchdog had breached its own guidance, which said it should not advise if a business was being investigated. Although the OFT has not revealed the names of the companies, they have been widely reported.
Proportion of products sold at the artificially inflated prices. Other products were never sold at that price level, the OFT said
(c) 2013 Guardian Newspapers Limited.
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