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Thursday, May 23, 2024

‘Geo-blocking’ gouges online shoppers

Norwegian consumers are often blocked from being able to buy goods and services online at the lowest prices available, simply because they’re clicking in from Norway. Two new European surveys found that fully 60 percent of Internet merchants engage in so-called “geo-blocking,” based on perceptions of what various geographic markets are willing to pay.

The European Commission contends it amounts to price discrimination, which it’s trying to prevent. Residents of many of the EU’s member nations are victims because they live in countries where prices are generally higher than in other parts of the world. Norwegians live in a country where prices traditionally have been among the highest in Europe as well, so they’re especially vulnerable to only being offered prices that are much higher than what’s otherwise available.

Suspicions proved
Norwegian Broadcasting (NRK) reported that two new surveys conducted for the EU Commission and consumer organization Forbruker Europa prove what many people living in Norway have suspected for years: The prices they’re quoted online for everything from airline tickets to rental cars and hotels to clothing and electronics are often higher than they’d be if they clicked in to the same websites from outside Norway.

Consumers renting cars online in the US, for example, can get far better deals than Norwegians who may be heading to the US on holiday and reserving a car online from Norway. The EU study found that more than 6,000 Internet retailers block or redirect consumers clicking in, depending on where they live.

“It’s a widespread problem that Norwegian and European consumers are prevented from gaining access (to lower prices) based on their nationality and residence,” Ragnar Wiik, leader of Forbruker Europa, told NRK.

Norwegian firms guilty, too
Similar practice recently came to light at Norwegian companies as well, including coastal voyage company Hurtigruten and airlines SAS and Norwegian. In those cases, Norwegian consumers came out ahead, though, because they were offered last-minute deals, for example, that foreign tourists weren’t.

Generally it’s the other way around. The goal by the online merchants is to sell their goods and services at a higher price or fare to customers who presumably have a greater ability or willingness to pay more. Other merchants, according to the surveys, try to avoid higher costs of shipping goods to customers living far from where they’re sent.

The survey ordered by the EU Commission concentrated on geo-blocking, which can also be imposed by merchants that don’t want to deliver goods or services to particular countries. The survey encompassed no less than 10,537 online merchants from all 28 EU member countries offering everything from cosmetics, clothing and books to hotels and airline tickets. Fully 63 percent were found to engage in geo-blocking.

“It means that the EU’s inner market and trade outside the EU don’t function properly,” said Wiik of Forbruker Europa, which is part of the EU Commission’s network of consumer organizations called ECC-Net, and guides Norwegian consumers in international trade. “We have a hard time seeing any objective reasons for blocking customers in six out of 10 online businesses.”

IP-address critical
Geo-blocking occurs when a website blocks or redirects someone clicking in, to another website with other prices, when the merchant’s online sales system recognizes where the potential customer’s IP-address is located. NRK reported that blocking can also occur based on email adresses, postal adresses or bank- and credit card details.

Redirection occurs most often, according to the EU survey, when consumers are looking to purchase airline tickets or arrange for rental cars. The survey determined that 40 percent of websites selling tickets to sporting events engage in the practice along with around 30 percent of hotel booking sites.

The practice is not illegal, but it results in consumers from certain countries like Norway being unable to receive the same hotel rooms at the same prices as those in other countries. The European Commission is trying to hinder such discrimination based on country of residence (external link to an EU regulatory proposal) with the goal being free flow of goods and services over borders, also when consumers shop online. Berglund



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