Scrutinise e-commerce sites that mislead users into making purchases

The Competition and Consumer Commission of Singapore (CCCS) recently took a Thai restaurant to task for breaching consumer-protection laws after it ran a “limited period” promotion for two years.

It is time for the antitrust watchdog to scrutinise potentially misleading advertisements on e-commerce platforms that are meant to exploit human psychology to create feelings of fear, excitement or pleasure, and influence decision-making.

According to Statista, a statistics portal, Singapore’s e-commerce revenue will amount to US$4.9 billion (S$6.8 billion) this year. It is expected to grow at an annual rate of 14.9 per cent from 2019 to 2023, when it will reach a market volume of US$8.5 billion.

It is not uncommon to find e-commerce platforms creating urgency by making something appear limited in availability — “only one in stock” — because having plenty of goods would not motivate consumers to buy an item.

Another trick is to introduce a deadline on a purchase, a common tactic used by deal sites. Creating urgency with a countdown, for example, forces consumers to make up their minds quickly, because the price they see may not be available for much longer and the opportunity cost is too much to forgo.

Some platforms also use words like “you save 40 per cent” or “order today to deliver tomorrow”.

Why does it seem as if everything is on sale all the time?

Retailers know how powerful the psychological effect of loss aversion can be.

So e-commerce firms take advantage of this by displaying the original price of a product next to its discounted price and pointing out the savings. The aim is to make consumers think that the cost of forgoing the savings outstrips that of the item.

Another misleading tactic is to display several similar items at different prices along with “spend S$50 and get free shipping”, although many of these free-shipping offers require buyers to spend a minimum amount. 

Some companies may also misuse promotional codes that users are prompted to enter, only to be told that they have been “fully redeemed”.

The same goes for hotel-booking platforms. Common practices include showing users the number of consumers considering the same hotel, which hastens decision-making. Does this mean other customers were really looking to book rooms in those hotels on the same dates?

CCCS should rein in deceptive discounts on e-commerce sites that lead consumers to believe they are buying something at a steal. The commission must also watch hotel-booking websites that are designed to give consumers the wrong impression about availability or price.

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