Consumer Corner: How to spot if a deal is too good to be true

Price gimmicks have become a feature of today’s life and they seem to be more and more pervasive — the right approach to spending is to take time to understand what is on offer.

"The old adage of ‘if it is too good to be true’ means it usually is. The internet is inundated with advertisements for cheap products and services but you should always check the reviews before you buy." Pic: iStock

Businesses want your money and often they will employ tactics to encourage you to part with your cash. It is easier than ever now for companies to reach their customers with online advertising taking on a life of its own through social media. Not all deals however will be genuine and some may be deceiving or what is known as a ‘price gimmick’. How as consumers is it possible to spot a deal that is too good to be true and one that is not? How do we know if it’s the real deal?

Cormac Horan, CEO of BillWinner says that on a basic level price gimmicks are used by companies to get consumers signed up to deals.

“The old adage of ‘if it is too good to be true’ means it usually is. The internet is inundated with advertisements for cheap products and services but you should always check the reviews before you buy.” Many sites will have reviews online where you can click in and see what feedback people have before you buy. This is a great way to get insights into the products or services on offer.

Financial expert, Frank Conway says that price gimmicks have become a feature of today’s life and they seem to be more and more pervasive. He says that the right approach to spending is to take time to understand what is on offer.

“Whether it’s the sales event for a flight, a hotel stay, a dinner with friends, an online promotion for clothes, phones or health and beauty treatments. There will almost always be extra costs attached. From a budgeting perspective, it’s really important to include the total costs to figure out what you pay.” Mr Conway advises that when, for example investigating cheap flights, also investigate the hotel costs because, he says there is no point availing of a low-cost flight to a place if accommodation costs are through the roof.

“For online shopping, it’s important to work out if there will be shipping and return costs or VAT or duty or other charges to be paid. Equally important will be return and refund policies for defective or disappointing quality products. Don’t be caught by the eye catcher price, factor in the total cost. It’s a good use of time and can save you a bundle in the end.” Mr Horan says that some of the key indicators when consumers are evaluating service providers are quality of service and staff knowledge.

“It’s important that service providers deliver peace of mind to their customers. The best service providers do not always equate to the cheapest service providers. Best value usually equates to a service that can be delivered at a fair price supported by excellent service quality and staff knowledge.” He said that some companies will use ‘dirty tricks’ to try and lure customers in.

“I came across a well known price comparison site in Ireland where their default settings in their energy category meant that customers see a price leaderboard where only their partners appear as opposed to an all of market leaderboard where both unpartnered and partnered providers can be viewed. Unfortunately in this case many customers are tricked into signing up for contracts where they pay for higher energy prices compared to a customer who purchased on a more transparent all of the market leaderboard.” 

Many people now use price comparison sites to search for deals, especially when they are considering switching a service provider for something like electricity or broadband. They will also use search engines to look for services and businesses offering what they are looking for. Mr Horan says however that be wary when using search engines as he says they were built to index the web and not built to enable customers to make the best consumer decisions.

“Search engines have been fined for displaying biased results. It is worth spending the time researching and investigating multiple sources before you purchase.” Also when using price comparison websites it is important to check the small print and see if the company says if they are completely independent or not. Once you know this you will know if you are getting the right advice. Some price comparison companies may have deals with certain providers but it is worth checking out if that is the case before signing up to any offers.

Mr Horan says too that when it comes to price it is worth bearing in mind that the best or lowest price on offer doesn’t necessarily mean the best value.

“I have seen cases where service providers offer the lowest prices but have really poor customer service ratings. The nirvana state is where customers can avail of the best price and great quality of service. There are service providers which can deliver on both but it’s worth checking their customer service ratings,” says Mr Horan.

One bit of advice too is to set up a household subscriptions calendar so that you know when your deals are getting close to expiring.

“It is easy to purchase and twice as easy to forget renewal dates. It is always wise to set up a renewal calendar with multiple reminder notifications,” says Mr Horan.