Some loyalty cards are an 'outright rip off', warns Which?, as group calls for crackdown on 'questionable' discounts

22 August 2024, 12:46

Many loyalty card schemes ostensibly offering discounts are a "rip-off", according to an investigation by consumer group Which?

The group looked at the pricing history of 12,000 products at supermarkets and healthy and beauty chains to work out how many of the prices available to members of the scheme were "genuine" savings.

Researchers looked at one "snapshot" day to examine how many times the non-member prices on items with loyalty discounts had been in place during the previous six months

At Boots, 10% of products had been at their non-member price for less than half the time, and at Superdrug, that was 16% of products.

Among supermarkets, that figure was at 10% for Tesco, 5% at Sainsbury's and 3% at Co-op.

This suggests that many of the discounts on offer were "questionable", although most were not misleading, according to Which?

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Which? found that products at Boots and Superdrug were raised to a higher price before going on offer.

For example at Boots, an electric toothbrush was at a non-member price of £400, compared to a price for members of £150. This product was only £400 for 13 days before, before which it was £150 for everyone.

Overall, researchers showed that Superdrug’s loyalty prices gave an average 33% discount off the non-member price.

That compared with 25% off at Morrisons, 24% at Sainsbury’s and 23% at Tesco, and 10% off at both Co-op and Boots.

Which? said the discounts might not be as good as they appear if the non-member price had not been in place very long, or was considerably higher than the price at other shops.

The group is now calling for the Competition and Markets Authority to tackle "questionable" pricing practices.

Ele Clark, Which? Retail Editor, said: "Loyalty cards are increasingly big business, with the explosion in two-tier pricing meaning shoppers will often pay a lot more if they aren't a member of the retailer's scheme. But while the discounts can look impressive, many shoppers are growing suspicious of non-member prices that seem high.

"We looked at the pricing history of thousands of products and found that, while the majority of discounts were not misleading, there were some questionable non-member prices and some examples that looked like an outright rip-off. Meanwhile some products were always, or almost always, on loyalty promotion, making it difficult to spot a genuine deal.

"Guidance on pricing laws needs to be updated to include loyalty pricing, to help regulators crack down if businesses break the rules. The CMA should continue to monitor loyalty pricing practices across key consumer sectors and be ready to use its new powers to take action against retailers that don’t comply."

A Boots spokesman said: “All promotions, including Price Advantage [loyalty offers], are assessed against all applicable laws and guidelines set out by the Chartered Trading Standards Institute.”

A Superdrug spokesman said its loyalty cards offered "genuine value and savings" and that it regularly compared prices elsewhere on the market to ensure this.