Fast fashion giant Boohoo is in the spotlight for allegedly issuing deceptive discounts, leading to a potential settlement cost of $197m. The impact of this deceptive discount trend extends beyond a single retailer, raising concerns for the retail sector as a whole.
Regulators Concerned: The Growing Issue of Deceptive Discounts
The prevalence of ‘deceptive discounts’ or artificial inflation is a rising concern for regulators. The UK government is granting new powers to the Competition and Markets Authority (CMA) to combat this misleading practice, aiming to protect consumer trust in ecommerce and address concerns of profiteering.
Lack of Clarity: How Ambiguous Rules Enable Unscrupulous Behaviour
The evolution of discount regulations has created ambiguity in determining what constitutes a deceptive discount. The shift from rigid rules to broader principles has left room for interpretation, contributing to a lack of clarity. Additional guidance and the influx of smaller online retailers have exacerbated the situation.
Vulnerability of Shoppers: The Impact of Artificial Inflation
Artificial inflation is prevalent not only in the fashion industry but also in retail as a whole. The growing desperation among shoppers to find the best deals, driven by cost-of-living pressures, makes them more susceptible to fake discounts. Sellers on platforms like Amazon Marketplace have been implicated in this practice.
Eroding Consumer Trust: The Consequences of Fake Discounts
The prevalence of fake discounts further erodes consumer trust in online retailers. Research reveals a lack of trust in online retailers’ ability to safeguard personal information, with consumers expressing greater trust in local businesses. Allegations of ‘greedflation’ exacerbate the issue, damaging brand reputation and affecting repurchasing decisions.
Continuous Concern: Deceptive Discounts Beyond Seasonal Sales
Deceptive discounts are not limited to seasonal shopping events like Black Friday and Cyber Monday. Evidence suggests that fake discounts persist year-round, with some deals proving to be misleading. Such practices undermine consumer trust and raise questions about retailers’ integrity.