It’s free… or is it? Pause and give some thought to that tempting offer: Opinion

Who hasn’t been tempted by the allure of a freebie? In an age of online shopping, flash sales and the pinch of rising living costs, the thrill of snagging a good deal can offer a fleeting, yet undeniable, satisfaction.

But as we hunt for bargains, it’s equally crucial to pause and question: Does the deal deliver on its promise, or is it just another clever marketing ploy?

In November, food delivery platform foodpanda was called out for misleading advertising for delivery services for its pandapro subscription service.

The ad promised “unlimited free delivery on all restaurants”. In reality, investigations by the Competition and Consumer Commission of Singapore (CCCS) found that customers were given a discount of only $3 on delivery fees for all restaurants or a discount of up to $6 for selected restaurants.

So “free” isn’t always what it seems. It’s a common tactic in deceptive or misleading marketing practices, according to the commission. The word has a powerful hook and seems to be an effective approach for capturing attention through advertisements.

Complaints about deceptive marketing have seen a slight uptick in Singapore, rising from 303 in 2022 to 309 in 2023, according to the Advertising Standards Authority of Singapore (Asas). That’s about six cases reported every week.

Such practices are probably triggered by the aggressive and competitive consumer market to capture a share of the customers’ wallet. The estimated total advertising spend of US$2.6 billion (S$3.5 billion) in 2024 in Singapore alone attests to this.

Here, there and everywhere

From free samples to free trials, from free gifts to free shipping, “free” has become ubiquitous in marketing across countries and products.

Beauty brand Sephora offers free samples with every purchase. It’s also common that online streaming platforms offer free trials to get people started, such as Apple TV, YouTube Premium and Hulu.

To catch consumers’ attention, a recent advertisement from a chain eyewear brand made the word “free” visually compelling, in large, bold and colourful font. In contrast, restrictions and other terms and conditions were much less accessible.

Some businesses cross the line with false promises, drawing action from the authorities.

Triple Lifestyle Marketing falsely advertised “free” alkaline water dispensers for a limited time, but they never materialised. Similarly, Nail Palace craftily misled customers into taking “free” lipsticks and lip balms as part of an anti-fungal treatment package, where the cost was already embedded in the package.

Deterrence against deceptive advertising is also not unique to Singapore.

In the US, the big three carriers T-Mobile, Verizon and AT&T were charged a combined US$10.2 million for falsely advertising wireless plans as “unlimited” and phones as “free”. Despite regulatory action, “free” promotion offers seem to continue enticing consumers.

Why we fall for ‘free’

The magic behind “free” lies in human nature. As consumers, we sometimes make impulsive purchases with “hot”, emotional drives. At other times, we decide whether to buy something based on “cold”, cognitive analysis.

However, when something is offered for free, people tend to abandon the rational decision-making process involving the cost and value of a product, but instead feel excited to seize the deal. This phenomenon is called the “zero price effect” by behavioural economists and consumer psychologists.

The power of the word “free” is further amplified by loss aversion and information overload.

Human beings have an innate aversion to loss. When we see something free, we hate to lose the deal and anticipate the regret and discomfort of doing so. Companies sometimes take advantage of our loss aversion and create urgency signals to push us.

Have you seen tactics such as countdown timers and limited-time offers, and eventually rushed to secure the freebies before the deadline?

Often, the “free” deal does come with its conditions. However, when people are overloaded with information, their attention is usually pulled to the most visually compelling part. Now perhaps you won’t be surprised that the details of a free offer and the note “T&Cs apply” are always in small fonts and away from the centre of an ad.

So what should “free” really mean for a consumer?

According to the CCCS, a statutory board of the Ministry of Trade and Industry, companies should ensure that “any representation that the price of a good or service is $0 or ‘free’ is not false or misleading”.

More specifically, “any qualifiers, subsequent/deferred charges, and key terms and conditions imposed on consumers as a result of their acceptance of the good or service should be stated clearly and prominently together with the ‘free’ representation”.

From this guideline, it is acknowledged that “free” comes with certain conditions, and the key to protecting consumers’ interest is the information clarity, transparency and comprehensiveness in any advertisement.

There are similar guidelines in other countries, such as the Full Disclosure policy by the Federal Trade Commission (FTC) in the US.

Grey areas and unethical practices

Despite established guidelines, some companies continue to tread – or even exploit – the grey areas of unethical marketing practices, whether knowingly or not.

Among the companies that offer free trials and collect users’ credit card information, how many actually inform users of upcoming recurring charges by the end of the trial period? And how many keep silent and even make the cancellation process super-complicated?

Based on CCCS’ guidelines, good practices for offering free trials are encouraged. But can more be done to make them mandatory?

Another controversial practice is requiring customers to leave a review in exchange for free gifts. Customers may feel compelled to leave a positive review, and are sometimes explicitly asked to give the highest rating, or write good things, or even hit certain keywords.

In this case, the cost of “free” affects not only the customers and those who may be misled by fake reviews but also undermines the credibility of online platforms that host such deceptive content.

Can companies truly thrive on deceptive advertising, even if they escape the scrutiny and penalties of the regulatory authorities?

Short-term gains may quickly unravel, as consumer scepticism grows and trust erodes over time. It can also undermine connections between consumers and the brand.

When that happens, “free” may no longer be attractive to consumers. It becomes a signal that makes people vigilant. As much as they hate to say goodbye to the freebies, sceptical consumers may be worried about losing more due to all the dubious schemes.

Businesses that have engaged in malpractices must follow up with recovery measures and higher acquisition costs in the future. Both marketers and consumers pay the price.

Don’t let your guard down

Consumers need to be more cautious than ever despite regulation and protection in Singapore.

First, they should resist the urge to act on impulse the moment they notice the word “free” or “$0” in advertisements, especially when it is accompanied by phrases like “for limited time only”. Taking the time to read the fine print and T&Cs are crucial to avoid being a victim of deceptive advertising and incurring unexpected costs. Often, “free” comes with strings attached.

Second, check for the company’s accreditation and review the return and refund policies provided by e-commerce platforms before accepting any “free” offer.

For example, businesses with CaseTrust accreditation offer consumers a level of assurance in case they are misled or treated unfairly. These accredited companies are required to resolve disputes with customers in a satisfactory manner, at no additional cost.

E-commerce platforms such as Shopee have updated their refund and return policy to align with the Consumers Association of Singapore’s (Case) Standard Dispute Management Framework for e-marketplaces. This helps ensure that consumers face minimal hassle in getting refunds, particularly when their online purchases are from offshore merchants who may not be subject to Singapore’s legal jurisdiction.

Consumers should also play their part to report to Asas misleading advertisements on “free” offerings. Victims of such advertisements should make a complaint to Case, which will aid them in settling the dispute.

Building stronger consumer awareness is crucial in helping individuals recognise what isn’t truly “free” and understand the steps they can take if they fall victim to deceptive practices. It is imperative to educate customers, particularly those who are most vulnerable – such as the elderly, non-digital natives, and those with limited education.

All relevant government agencies and stakeholders must continue their collaboration to monitor and enforce their consumer protection-related legislation to deter errant businesses in flouting the rules.

Amid the mood of Christmas holiday sales, consumers should not let their guard down. Just remember, when something is advertised as free, there could be a catch. Don’t get caught.

• Dr Yao Jingxian is a senior lecturer at the SUSS School of Business. Associate Professor Lau Kong Cheen is head of the marketing programme at the school.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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