CMA to investigate homeware retailers online pricing practices

The Competition and Markets Authority (CMA) has announced that it has opened an investigation into homeware retailers Wayfair, Appliances Direct, and Marks Electrical around their online pricing practices.

These brands are being investigated to determine whether their time-limited sales ended when they said they would, or whether customers are being automatically opted in to purchasing additional services.

These practices include drip pricing and pressure selling, under the new Digital Markets, Competition and Consumers Act 2024 (DMCCA).

Wayfair is being specifically investigated in relation to time-limited sales, Marks Electrical is being investigated in relation to default opt-ins and Appliances Direct is being investigated for both.

Based on the results of its compliance sweeps, the CMA is sending advisory letters to 100 businesses, outlining concerns about their use of additional fees and online sales tactics.

The letters target sectors where the CMA identified potential concerns, as well as key areas of spending, such as; holidays (including package travel), driving schools and homeware retailers among others.

While the DMCCA has updated the law on pricing information, certain aspects of drip pricing have long been prohibited under existing consumer legislation.

Practices such as failing to include mandatory charges upfront, introducing unavoidable fees at checkout, and presenting misleading headline prices that exclude compulsory costs have been unlawful for years under the Consumer Protection from Unfair Trading Regulations 2008.

The investigations launched by the CMA are the first enforcement cases opened using its new powers, which enable it to decide whether consumer laws have been broken, rather than having to go through the courts.

If the CMA finds there has been an infringement of the law, it can order businesses to pay compensation to affected customers as well as fining companies up to 10% of global turnover.

CMA CEO Sarah Cardell said: “At a time when household budgets are under constant pressure and we’re all hunting for the best deal possible, it’s crucial that people are able to shop online with confidence, knowing that the price they see is the price they’ll pay, and any sales are genuine.

“This is just the start of our work. Any businesses who break consumer law should be in no doubt we will stamp out illegal conduct and protect the interests of consumers and fair-dealing businesses.”

Marks Electrical responded to the investigation stating that “following an initial engagement we have already taken proactive steps to further align the presentation of optional services with the CMA’s most recent expectations under the DMCCA”

It stated: “We pride ourselves on transparency, clear pricing, and providing services that customers consistently value. For many years we have led the way in offering optional recycling, packaging removal and old-appliance collection services, helping to reduce landfill waste and ensuring responsible disposal of plastics and polystyrene. These services are highly popular with our customers and remain entirely optional.”

Retail Sector has contacted Wayfair and Appliances Direct for comment.