The Competition and Consumer Commission of Singapore (CCCS) has proposed a set of guidelines on price transparency regarding the “dos and don’ts” for suppliers of all consumer-facing industries relating to various pricing practices so as to avoid misleading consumers, following its findings from a study on the online travel booking sector in Singapore.
CCCS’ market study on the online travel booking sector in Singapore revealed that the online travel booking segment in South-east Asia was worth US$19.4 billion in 2015, accounting for 61 per cent of the internet economy in South-east Asia. Between 2015 and 2018, online travel booking grew at 15 per cent driven by growth in online airline and hotel bookings, to a size of US$29.7 billion in 2018. Singapore was estimated to be the third largest in South-east Asia in terms of online booking market value in 2018, with the highest per-capita online travel booking expenditure in the region. By 2025, the online travel booking market in South-east Asia is estimated to reach US$78 billion, according to Google’s and Temasek’s e-Conomy SEA 2018 report.
Singapore consumers are increasingly turning to online channels in making their travel bookings, including searching for, comparing, and purchasing travel-related products such as air tickets and hotel accommodation online, whether directly from the websites of service providers like airlines and hotels, OTAs such as Expedia and Booking.com, or web aggregators, also known as metasearch engines like Skyscanner and Trivago, CCCS revealed.
Against this backdrop, CCCS conducted a market study on the online provision of bookings for flight tickets and hotel accommodation to Singapore consumers. The study examined various business practices adopted by the industry players, and the associated competition and consumer protection issues. This is the first market study by CCCS that examined both competition and consumer protection issues, since CCCS took on the additional function of administering the Consumer Protection (Fair Trading) Act (CPFTA) from April 1, 2018.
Price, being an important factor for most consumers and crucial for comparing between alternatives, is key to consumers making well-informed purchasing decisions. In the absence of clear disclosure on prices and pricing practices, consumers may be misled into making wrong decisions, said CCCS.
Following the study, CCCS has developed a set of guidelines on price transparency to assist suppliers of all consumer-facing industries in their display and advertisement of prices to avoid misleading consumers and infringing the CPFTA. These guidelines apply to both online and offline transactions.
The four common practices of online travel booking providers that give rise to consumer protection concerns, as well as CCCS’ proposed guidelines on price transparency are as follows:
1. Drip pricing
This refers to the practice of not disclosing both mandatory and optional charges upfront, which can lure consumers into making a purchase based on incomplete price information, and restrict competition by making it harder for consumers to compare product offerings across suppliers.
What CCCS recommends: Suppliers should ensure that any unavoidable or mandatory fees or charges, like taxes and surcharges, are included in the total headline price.
2. Pre-ticked boxes
Such practices can result in consumers buying unwanted add-on products, as a result of failing to opt-out by unchecking the pre-ticked boxes.
What CCCS recommends: As good practice, suppliers should avoid using pre-ticked boxes to automatically include add-ons. If pre-ticked boxes are used, suppliers must provide proper disclosures of the goods or services offered in a clear and prominent manner.
3. Strikethrough pricing
Such practices can mislead consumers into making a purchase, or paying a higher price, should the comparison between a current and a crossed-out price be false or misleading.
What CCCS recommends: When comparing their price with a previous price to represent a discount, suppliers should use an actual, bona fide previous price (i.e. usual price) that provides a legitimate basis for the price comparison.
When comparing their price with others, suppliers should ensure that any representations and price comparisons with other suppliers’ prices or the use of terms such as cost price, are not false or misleading.
4. Pressure selling
Suppliers touting false or misleading claims can create a false sense of urgency for consumers to make a purchase based on inaccurate information.
What CCCS recommends: When using the term “free”, suppliers should ensure that any representation that the price is $0 or “free” is not false or misleading and any qualifiers, terms and conditions as well as subsequent or deferred charges should be stated upfront clearly and prominently.
CCCS’ recommended positions are intended to encourage online travel booking providers to adopt transparent pricing practices, such that prices and their accompanying terms and conditions are communicated clearly. Through this, CCCS aims to educate suppliers and over time, reduce misleading pricing practices, thereby enabling consumers to shop confidently. This will enable consumers to make an informed choice and allow businesses to compete on a level playing field.
The guidelines will provide more clarity on what constitutes an infringement of the CPFTA and how suppliers should display and advertise prices in a clear manner, it added.
CCCS is seeking public feedback on the proposed guidelines on price transparency. The closing date for submissions is October 21, 2019.
More information on the proposed guidelines on price transparency and the public consultation can be accessed and downloaded from the CCCS website under the section “Public Consultation”.
CCCS said it will continue to monitor market developments in the online travel booking sector in Singapore.