Five sneaky online sales tricks

A group-selling site has been slammed by the OFT after promoting cut-price iPhones to thousands of people when it only had eight available. Robert Powell takes a closer at this, and four other online sales tricks...

There's a fine line between savvy selling and sneaky scamming. And this line is blurring even further with the advent of new social and personal models of internet sales.

One of these new models is the group selling website – where a company will offer a product at a highly reduced price for a set period of time. But what they usually don’t tell you is exactly how many products they have in stock at this price, leaving the door open for unfair sales tricks.

Groupola got caught practicing one such sneaky scam last week after it emerged that it had promoted £99 iPhones to thousands, when it only had eight in stock.

Let’s take a closer look...

Baiting sales

This sales trick is nothing new and has been present throughout high street stores and supermarkets for years. It’s known as ‘baiting sales’ and occurs when a retailer tempts you into its store with a bargain but only holds a small amount of stock at the discounted price. The hope is that the offer will sell out quickly and you’ll buy a similar product at a higher price from the store.

The only difference between this and the online version of the trick that Groupola was caught practicing is that the websites are after your personal details, as well as your cash!

So in the iPhone case, thousands of people signed up to the site hoping to get their hands on a cut-price handset. But as Groupola only had eight in stock, (yet still reported throughout the promotion that several were available) most buyers were left disappointed. However, the huge interest meant that the company now had thousands more e-mail addresses to send its daily deal alerts to.

Baiting sales is against consumer protection rules, and hence the Office of Fair Trading (OFT) has taken enforcement action against the company that owns the site; Markco Media. Groupola has also apologised and said that those responsible for this bait pricing no longer work at the site.

But there are several other sneaky sales tricks that online retailers are now using...

Rave reviews

Baiting sales wasn’t the only unfair sales practice Groupola was caught practising. The OFT also reported that one of the firm’s employees had been posing as an ordinary customer and posting positive reviews about the company on the social networking site Facebook.

Along with a declaration to prevent baiting sales, Groupola has also signed undertakings that prevent it from making statements about its site without disclosing the true identity of the author.

Obviously it’s always a good idea to look around for reviews of a site or product before parting with your hard-earned cash – but you should still be wary of rave write-ups and product plugs.

In an article a few months ago looking at various ways to make money from social networking, I wrote about the perks available to those with influential online identities. Indeed, there’s now even a company – the appropriately named Klout – that specialises in identifying social networkers that form opinion across the web.

Last year, the site teamed up with Virgin America and offered free flights to influential Twitter users – in the hope that a few favourable tweets would boost demand for flights on its new California – Toronto route.

But while this is good news if you’re a social networker with a lot of online clout, it somewhat distorts the marketplace if you’re a consumer, as you never really know if a review is genuine or just a cunning form of advertising.

Airline add-ons

Pricey add-ons are one of my pet hates – especially when it comes to buying flights. Just last week I booked return flights to Prague on the budget airline WizzAir - £80 return, a great deal! But just as I was about to input my card details, an extra £8 magically appeared in my shopping basket – Visa Debit card charge apparently!

Card charges aren’t the only extra fees that budget airlines now levy on flights. Here’s a table showing a few of the other add-ons WizzAir enforces:

Obviously the best way to avoid these charges is to book online, avoid taking any large bags on-board and check-in online. You can also get out of paying the card charges by getting hold of a prepaid credit card, as most budget airlines do not charge a processing fee for purchases made using these cards.

Automatic renewal

I reported on the cunning scam of automatic renewal last month in The sneaky anti-virus software trick. Automatic renewal is another practice which walks the line between clever selling and illegal scamming; what’s more it lends itself perfectly to savvy online retailing.

Automatic renewal is a policy operated by a lot of membership-based companies whereby a subscription is automatically renewed and charged for without the direct consent of the user. Insurers and anti-virus companies claim they use the policy to ensure that their customers are always protected – but it can see you end up out of pocket as the best rates are often only available to new customers.

To operate this policy, a company does have to obtain your permission – but this is often on an opt-out basis. So if you don’t tick the small print box opting out of automatic renewal – you’ll be signed up to it!

Targeted marketing

Now, this marketing technique always sparks a bit of debate here at lovemoney.com over whether it’s invasive spying or just effective marketing.

I reported on targeted and behavioural marketing last year in How your phone spies on you, and I’m still very unsure about it. At the most basic level, it works by recording and logging your online purchases and shopping activity and then targeting advertising and marketing at you suggesting similar products you may like to purchase.

Behavioural advertising is a growing industry and I’ve explained it in more depth in my previous article – but my main problem with it is two-fold. Firstly, it’s a slippery slope from helpful suggestions to Orwellian spying. How long before a text message to a friend suggesting a pint will set off an advert directing you to the nearest pub?

And secondly, is it a positive thing to be constantly bombarded by tailored advertising urging you to buy into the latest fad or fashion? Yes, the final choice does lie with you – but still, it’s a lot easier to needlessly spend if you’re persistently being presented with products you might like to buy.

What do you think?

Are these sales tricks just savvy marketing? Or are they outright scams?

Let us know your thoughts in the comment box below.

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