Forget FOMO, shoppers are now suffering FrOMO – the Frustration Of Missing Out on online prices that are too good to be true

24 August 2018
  • It’s all about FrOMO, not FOMO (Fear of Missing Out), the feeling of frustration, disappointment or anger when you miss out on the price of goods or services you saw advertised online
  • Nearly three-quarters (74%) of consumers surveyed admit to having FrOMO when the “teaser” prices for things like flights, gig tickets and loans soar above the initial advertised price
  • Leading psychologist says the rise of online shopping and an increasingly competitive market place has helped trigger this common experience among consumers, with many people no longer trusting online retailers
  • Mystery shopping also reveals consumers could end up paying a whopping 428% more than initially advertised “teaser” prices for train journeys, 527% more for flights and 183% more in interest for a personal loan with a leading UK lender
  • The findings follow a report commissioned by Shawbrook Bank which revealed UK households pay more in loan servicing costs than initially expected, costing them an estimated £204 million a year [1]

The frustrations endured by British consumers when shopping for goods and services online has given rise to a widespread syndrome that has been dubbed the new FOMO.

The phrase FrOMO will not yet be familiar to Brits but the majority of people will have suffered the effects of it when trying to buy something online. FrOMO – Frustration Of Missing Out – describes the feeling of anger and disappointment we get when we miss out on advertised prices and end up paying more than expected, often due to extra fees, costs and charges that weren’t included in the advertised price.

A new study commissioned by Shawbrook Bank reveals that FrOMO is chronic in the UK, with nearly three quarters (74%) of shoppers surveyed admitting to feeling frustrated when they are unable to buy something at the originally advertised ‘teaser’ price. In fact, over two thirds (69%) of the 2,000 consumers surveyed said they have ended up paying more than the advertised price for goods and services ranging from package holidays, flights and car hire to gig tickets, insurance and personal loans. 

Perhaps most worrying is that FrOMO could be turning us into a nation of angry shoppers, it is eroding our trust in websites and online brands. Psychologist, Honey Langcaster-James explains: “Imagine if “teaser” pricing happened on the high street, and what you were charged at the till was different from the price on the shelves? There would be chaos in shops much worse than any Black Friday shopping spree.

“In an increasingly competitive marketplace online brands are under pressure to catch consumers’ attention, so they often place “teaser” prices up front and central which may not actually transpire into offers that are genuinely available for a customer when they try to purchase.

“On top of the teaser pricing, the actual online buying process can feel like it’s designed to confuse shoppers. We talk about retail therapy but the online experience can potentially have a negative psychological impact on people leaving them feeling irritated and distrustful. This will undoubtedly influence their consumer behaviour.”

The practice of “teaser” pricing is a commonly used marketing technique to hook customers. However, while not in breach of any advertising standards or rules, Shawbrook Bank’s research findings suggest it does have a negative psychological and financial effect on people. It may even change how people interact with the brands that do it.

Not surprisingly, just under two thirds (64%) of respondents in the study categorically say they like brands less that advertise using teaser prices, while 70% say that when they experience “teaser” advertising it makes them more likely to avoid buying goods and services from those brands in the future. A further 54% say they are very unlikely to recommend a brand that uses teaser advertising to a friend as a result.

The difference between the price advertised at the start and the end of the process can be significant too. A secret shopper analysis of some of the leading exponents of this type of marketing revealed that the advertised price can hugely differ from what consumers actually end up paying.

Mystery shopping research has revealed that consumers could end up paying a whopping 428% more than initially advertised for train journeys and 527%% more for flights with a well-known budget airline before any add-ons or surcharges like delivery of tickets, seat reservations, luggage or booking fees are taken into account. The interest rate for a personal loan offered at the end of the application process by a leading UK lender was 183% higher than initially advertised.

Honey adds: “In life we tend to feel let down by anyone who over-promises and under-delivers. If this happens on a repeated basis then we start to become angry and frustrated and in worst case scenarios this experience can sever a relationship. Essentially, this is what is happening when brands constantly tease prices before increasing them when we decide we want to make a purchase. The feeling of frustration which comes from missing out leaves us feeling cheated by the brands we are buying from and sometimes we will choose to walk away, perhaps even for good.”

The vast majority (83%) of UK consumers surveyed are in agreement that it is misleading to advertise a teaser price for goods and services at the start of the process only for it to change by the end. A similarly high proportion (79%) feel even more strongly and go as far as to say they feel ‘cheated’ by the practice.

In response to FrOMO, consumers are trying a variety of tactics to avoid paying over the odds. Some of the most commonly cited tactics include travelling at off peak or inconvenient times (36%), using discount codes or vouchers to get a cheaper deal or only purchasing directly through the merchant and to avoid third-party websites (32%).

Paul Went, Product and Markets Director at Shawbrook Bank says:

“Our latest research shows that FrOMO has become a common experience for British shoppers. There is no doubt that consumers feel misled and frustrated by teaser pricing and we highlighted and addressed this as a problem in personal loans earlier this year with our Transparency Charter. We found the gap between the interest rates advertised by lenders and the interest rates paid by UK customers was widening, which was causing confusion and frustration among consumers.

Went continues:

“FrOMO clearly has a major impact on how we shop and what we think about the brands who subject us to it. It has made the process of shopping for holidays, flights, hotels, train tickets, car hire, tickets to gigs or sporting events and personal loans fraught and fractious. All too often getting the product or service you want can feel like a battle and that isn’t really the right 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] Source: 2018 Cebr report, Are consumers being misled by Representative APRs.
https://www.shawbrook.co.uk/media/1848/apr-campaign-report.pdf

Methodology

Our consumer survey was conducted by 3GEM Media Group and was undertaken between 27th June and 2nd July 2018. The total sample size was 2000 adults who had experience of buying something online, and it was nationally representative on age, region and gender.

Our mystery shopping research was conducted between 17th July and 10th August. We measured the price of flights, hotels, rail travel, car hire, gigs and festivals, sporting events, personal loans, insurance, and broadband/tv to see how advertised prices and rates compared with the final price we were quoted. To ensure accuracy, each webpage throughout the process was captured along with each element of the process in a table to enable clear and direct supplier comparisons.