Following actions of the Netherlands Authority for Consumers and Markets (ACM), online platform Wish has banned its merchants from using fake discounts on its platform. In addition, Wish has blocked the use of personalized pricing in the EU since May 25, 2022. This has been the result of actions taken by ACM. In these actions, ACM worked together with other European consumer authorities and with the European Commission. Wish’s parent company, ContextLogic.Inc, is a major American platform that sells items online such as fashion, home decor, and electronics to consumers in a large number of European countries, among other regions.
Edwin van Houten, Director of ACM’s Consumer Department, explains: “It is important that consumers are able to make online purchases with confidence. In the ever more digital world too, online retailers must be transparent about the way in which prices are set. Consumers must be able to base their choices on correct information. The rules fully apply to businesses that originate from outside the EU but that also target consumers inside the EU. Therefore, we welcome Wish’s commitments.”
What was this case about?
According to ACM, Wish lured consumers with significant discounts on prices that it presumably had not charged. These discounts therefore seemed like incredible deals, as a result of which consumers could be tempted into making purchases they perhaps would not have made if they had had the right information. That is not allowed. Any discount must always be a genuine discount, for example, on a price that had been actually charged before. In addition, personalized pricing was used on Wish’s platform. Such prices were based on the consumer’s purchase behavior and location, among other factors, while, according to ACM, Wish had failed to disclose this practice sufficiently. Businesses can use personalized pricing under strict transparency conditions only. For example, they must clearly indicate the use of such practices prior to the purchase, and consumers must also understand in what ways their personal information affect prices. After ACM had fleshed out the conditions, Wish decided to stop using personalized pricing from May 25. Over the next few months, we will keep a close watch on Wish to see if they honor their commitments.
Actions with collaborations at the European level
ACM confronted Wish with its practices. In that effort, ACM worked together with the European Commission and with several other European consumer authorities. The results apply, in any case, to all EU countries.
The digital economy and prices
More and more consumers purchase products and services online. This offers many benefits, but, at the same time, consumers must be protected against the risks of digitalization. The digital economy is also one of ACM’s key priorities on its Agenda. In May 2022, stricter rules for online retailers came into force. For example, businesses must inform consumers about personalized offers. In addition, the rules about discounts have been tightened.