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Brands’ use of ‘teaser’ pricing causes frustration and anger amongst UK consumers

31 August 2018

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Research commissioned by Shawbrook Bank looking into people’s shopping behaviours online and how they feel about ‘teaser’ pricing and advertising has revealed that UK consumers are frustrated by this practice and it has given rise to a widespread syndrome called ‘FrOMO’, which could be turning us into a nation of angry shoppers.

FrOMO – Frustration Of Missing Out

Noun informal – the feeling of anger and disappointment you get when you miss out on advertised prices online and end up paying more than expected.

2,000 people were surveyed as part of the research where nearly three quarters* (74%) of consumers admitted to feeling frustrated when they are unable to buy something at the originally advertised price and 84%* even go as far to say they feel cheated.

Well-known psychologist, Honey Langcaster- James, a spokesperson for the campaign, concludes the practice can have a negative psychological and financial effect on people. It may even change how people interact with the brands that do it.

This research follows the release of the Cebr report, ‘Are consumers being misled by Representative APRs?’ earlier this year, which delves into the personal loans market and lenders use of Representative APRs in their advertising. The report stated that ‘Representative’ APRs have become increasingly unrepresentative of actual interest rates offered to successful loan applicants. The report also highlighted that UK households are paying an estimated £204 million in extra interest a year due to being charged interest rates higher than the ones advertised [1].

The practice of “teaser” pricing is a marketing technique used to hook customers in and banks and lenders across the UK are culprits of this type of marketing. At Shawbrook, we’ve taken a different approach, which is outlined in our five-point Transparency Charter. We believe in being open and honest, we don’t use teaser rates as we feel they are misleading and we’re committed to being fair and transparent with everyone that applies for a personal loan.

Our soft search technology allows consumers to apply for a loan quote with no impact on their credit score and we offer an instant, guaranteed rate upfront. Our loan rates are personalised, which means, everyone that applies is given a rate that is reflective of their risk profile.

Our latest research shows that FrOMO has become a common experience for British shoppers.

— Paul Went, Products and Markets Director at Shawbrook

Paul Went, Products and Markets Director at Shawbrook continues:

“There is no doubt that consumers feel misled and frustrated by teaser pricing. All too often getting the product or service you want can feel like a battle and that isn’t the kind of relationship we want to foster with customers. It’s for that reason we have made a promise to our borrowers that we will be upfront with them from the outset.”

[1] Calculation by Cebr based on the average discrepancy between interest rate offered and Representative APR for consumers who take on a loan despite being offered an interest rate above the Representative APR.

*2,000 UK consumers surveyed by 3Gem, 2018