Digital Advertising and Purchasing: Fun or a New Type of Deception?

Abstract

To illustrate the larger issues involved in regulating the digital economy, this paper uses the example of “drip pricing” as it applies in the digital world. Drip pricing is an advertising technique in which firms frontally advertise only part of a product’s price, and later reveal other charges as the customer navigates the buying process. Drip pricing often impacts consumer decisions so that they spend more money than they had originally budgeted or anticipated.

In the case of a person of low income, this extra spend may take money away from the budget for items such as books and school supplies for children or more nutritious food. This scenario is an aggravating factor which should be the subject of separate treatment.

Given the challenge of adopting old law to new digital platforms, I propose four general principles as an approach to regulate the digital economy. These four principles are developed through an analysis of online drip pricing and its relationship with consumer protection.

First, the “first internet screen” viewed by a consumer must accurately set out total pricing per unit, with disclosure of all fees, to the extent that technology will permit. Second, the interactive digital process must accurately portray the quality of the good or service. Third, the interactive digital process should facilitate consumer reversal of choices to the extent that technology will permit. Finally, where there is a finding that a digital process constitutes a violation of competition law, an aggravating factor in the assessment of penalty should be whether the least advantaged are impacted in their ability to satisfy basic needs.