Oxylabs’ Research on Fake Discounts: Are Shopping Events Worth the Deal?

Increasing digitization, growing purchasing power, and the COVID-19 lockdowns stipulated a sudden e-commerce sector growth, exacerbating the global competition among retailers. Today, Amazon alone has over 300 million active customer accounts and over 1.9 million selling partners worldwide. 

Standing out among millions of other sellers has become a gargantuan effort for small retailers, resulting in questionable pricing practices to win consumer’s attention, sell more, and increase profit margins. “Fake discounts” are among the most common, especially during the main annual shopping sprees, such as Black Friday and Christmas. 

Although such manipulations are forbidden by law both in the US and EU, various researches show that sellers might be trying to fly under the radar. Regulatory bodies must gather price intelligence on a large scale using advanced web scraping and data analysis solutions to protect consumers and enforce legal compliance. However, due to misconceptions still surrounding the web scraping industry, these opportunities are often missed. 

As a leading web intelligence collection platform, we decided to employ Oxylabs’ extensive data collection infrastructure and experience to examine the prevalence of fake discounts in major US marketplaces. As a case study, we chose to analyze Black Friday 2024.

In such cases, the sellers can increase their sales volumes while keeping the margins high. Moreover, with the help of fake discounts, they might generate proxy sales and rank higher in the marketplace, creating unfair competition and harming both consumers and the marketplace itself. Fake discounts can also be observed in cases where certain goods are constantly “on sale,” never sold for their original price.

Note that fake discounts are not the same as dynamic pricing. The latter is a legitimate business strategy when the product's original price is adjusted in real time based on supply-demand fluctuations and other external factors but without framing it as a price reduction, i.e., a “discount.”

The consumer psychology trap

Unfortunately, consumers are highly susceptible to deceptive pricing due to psychological reasons. In a recent OnePoll survey, 67% of respondents said the growing living costs made them more desperate to find good deals, and 71% believed they were saving money by buying products on offer. Moreover, consumers treat prices as a signal of a product’s quality, so a higher reference price increases the likelihood that they will buy a product.

Two years ago, the European Commission carried out a sweep on Black Friday sales, revealing that around 25% of price reduction announcements were inconsistent with EU law. Violations occurred in at least 43% of the screened websites. 
In 2021, a study that monitored Black Friday deals in the UK showed that 85% of the discounted products had cost the same or less six months earlier, meaning that consumers might have been fooled into thinking they were getting real Black Friday “deals.” In the US, however, the phenomenon of manipulative pricing has been less monitored.

44 million data points: How we framed our research

Since we tracked publicly available product data in two major US marketplaces using US locations, we had to base our research on US legal regulation. According to the US Federal Trade Commission (FTC), a product can be advertised as being on sale only if the pre-sale price was “a bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time." 

In different states, consumer protection laws might establish a more specific definition of a “substantial period of time.” California is considered to have the clearest rules regarding discount pricing. Under California law, businesses must prove that items have been regularly offered at their advertised former prices for a period of 3 months right before the discount (or 90 days).

After analyzing case law and recommendations, we decided to treat advertised former prices as “regularly offered” (or prevailing) in those cases when they were explicitly present at least 50% of the time during the 3 months period right before Black Friday (November 29, 2024). For example, if on Black Friday day, Product X's advertised former price (the reference price) was 270$, we checked if it was actually offered for at least 50% of the time (45 days) in the 3-month period prior to the event.

Additionally, we checked for products that were always “on discount” from August 13 to November 29, 2024. This can also hint at possible law violations, where products were never sold for their original prices. Unfortunately, we cannot prove it indisputably. 

Basic research stats

From August 13 to November 29, 2024, we tracked 61,172 products in two major US marketplaces. Pricing data has been observed on an hourly basis, meaning that every unique product URL has been monitored 24 times per day. We used our Web Scraper API for this enormous task. 

All products were randomly selected from different categories and departments: in both marketplaces, we checked almost 3,000 of them. We made sure that our analysis covered the most popular consumer goods: video games, toys, electronics, home and kitchen appliances, sports and outdoor equipment, clothing, shoes, beauty and personal care, and even office products.

Do these numbers show fake discounts affect less products than people think? Definitely not. What these numbers show is a huge gap in legal regulation. In the case of digital commerce, the 90-day period is excessive as the majority of small sellers do not keep the products in the marketplace for so long — global ecommerce is too dynamic. 

If the product was sold for a shorter period than 90 days, to see if the discount is really genuine, one must check whether the advertised reference price was a prevailing market price, i.e., perform competitor analysis. However, anyone with experience in e-commerce intelligence knows that retrospectively acquiring reliable competitor pricing data is nearly impossible. There is also an option to check if the seller clearly, exactly, and conspicuously stated in the advertisement the date when the alleged former price did prevail. However, it is unclear where and in what way this data should be presented.

This complexity of requirements means that almost any suspicious discount must be individually checked in order to prove a “fake discount” (or, vice versa, to prove that your discount is genuine). But what if you are a regulatory body and there are thousands or millions of sellers with millions of products? Unfortunately, at this point, finding an automated solution for monitoring fake discounts in the US market would be extremely complicated as the legal regulation isn’t properly adapted to the booming digital economy. 

And yet, there is another way to check if the consumer really benefits from the major shopping festivals. 

Beware: that cheap deal is probably a trap

Fake discount (per legal definition) is not the only way to manipulate prices. Our data from August to November indicates frequent and irregular changes in both original and discounted product prices that might point to broader pricing manipulation tactics designed to appear attractive to consumers and win the so-called “buy box” on the marketplace.

Some discounts might not violate the laws but still be exploitative and unethical towards the consumer. To see if consumers really benefited from this year’s Black Friday discounts, we performed additional data analysis — we took the discounted Black Friday prices and analyzed whether the consumer could buy the same products for less money prior to this event. Unfortunately, our suspicions appeared to be true.

In the first marketplace we analyzed, the discounted Black Friday price was the lowest price during the entire week prior to Black Friday in only 28% of cases! The remaining 72% of deals were not saving consumers any money.

If we look back one month, the situation is better — the Black Friday deal's price was the lowest price during that period in 88% of cases. Similar numbers could be observed looking two and three months back. And yet, it still means that at least 1 in 10 Black Friday deals were not saving consumers any money.

The situation in the second marketplace was slightly better. The discounted Black Friday price was the lowest during the entire week in 59% of cases. If we look back one month, we see that the Black Friday deal's price was the lowest price during that period in 86% of cases, while 14% were not actual “deals.”

Therefore, if you are waiting for the Christmas sales, you have to stop and think twice. At least, check the prices in various places and see how they fluctuate over time. Our data clearly indicates that waiting for the Black Friday deals was not the most rational strategy in many cases, and consumers should track the prices for a longer period of time to make sure they really pay less.

Conclusions

Oxylabs’ data research shows that legal regulation alone is not enough to protect consumers — regulatory bodies need experience and resources to track and analyze publicly available web data and monitor fake discounts. On the one hand, AI-driven web intelligence solutions open organizations the possibility to keep tabs on thousands of websites simultaneously and monitor pricing changes on a large scale with relatively small resources. On the other hand, if the laws are too vague or don't meet the new reality of the digital economy, they become fictional documents preventing efficient ways to enforce the rules.

Although our findings cannot be generalized to reflect the situation in different countries, previously cited research shows that the UK and the EU are witnessing the problem of manipulative discounts on a large scale, too. As the Christmas shopping spree and major winter sales approach, consumers should be aware of many different pricing manipulation tactics and think twice before getting caught in the never-ending hunt for “deals.” Some of them might be nothing more than ghost discounts.