Who: Advertising Standards Authority (“ASA“), Argos Ltd & Victoria Plum Ltd trading as VictoriaPlum.com
When: 2 March 2016
Law stated as at: 2 March 2016
The ASA has reminded retail giant Argos Limited (Argos) and online bathroom retailer Victoria Plum Limited (Victoria Plum) that compliance with the BIS Pricing Practices Guide (PPG) is no guarantee that the ASA will conclude that a savings ad has not misled consumers in respect of the benefit available.
In the two website ads which came under the ASA’s scrutiny, Argos and Victoria Plum had advertised their product in the following way:
- Text promoting Argos’ hair straighteners on its website stated “Was £64.99. £32.49* HALF PRICE”. An asterisk linked to the text and stated that the item had previously been on sale for £25.99.
A consumer who had understood that the straighteners had previously been available for less than the advertised price challenged whether the savings claim was misleading.
- Victoria Plum featured a product page for a Unit & Basin on its website, the price of which was stated as “£199 Was £299 YOU SAVE £100”.
In this case, the complainant had received a brochure from Victoria Plum which stated a price lower than the advertised saving price, and therefore also asked the ASA to determine whether the ad was misleading.
Response from Argos & Victoria Plum
Both companies referred to their compliance (or in Victoria Plum’s case, attempted compliance) with the PPG, a set of guidance published in 2010 by the Department for Business Innovation & Skills for traders on good pricing practices. Argos explained that their hair straighteners had been available at 4 prices over the period from the end of April to the end of November 2015; and that the two lowest prices (£29.24 and £25.49) were “spike deals”, which were permitted within the PPG and lasted for a very brief period.
Victoria Plum argued that they were aware that the PPG required a product to be price-established for at least 28 days, and blamed the fact that their “was” price of £299 only applied for a period of 26 days to an administrative error resulting in the price being changed one day early.
The ASA noted both company’s references to their compliance or attempted compliance with the PPG. However, the ASA also considered factors such as the length of time that the products had been available at the higher price referenced in the ad and the volume of sales at the higher price stated in the ad.
The ASA found that Argos’ highest volume of sales, over double those achieved at £64.99, had been at £32.49. In the same vein, the ASA reported that Victoria Plum had not sold a single product while it was available at £299. Moreover, Victoria Plum had offered the product for purchase at the higher price for 26 days immediately before the promotion but for the majority of the 3 months prior to that, it had been offered for purchase at either £135 or £169.
In both cases, the ASA found that the “was” price was not a genuine representation of the price at which the product was usually sold, and that the implied savings claims were misleading. The ASA therefore concluded that both ads breached the CAP Code rules regarding misleading advertising, substantiation and prices and informed both companies that their adverts must not appear again in their current form.
Why this matters:
The ruling serves as a good reminder that the ASA is committed to ensuring that future savings claims do not mislead customers about the benefit available.
In particular, such rulings highlight the issues posed by the current PPG, which risks giving businesses the impression that compliance with the BIS Price Practices Guide in itself would set them free from the application of advertising law. At present, a final draft of a new PPG is being finalised. The new PPG will be less prescriptive and place a greater emphasis on whether on the whole companies have behaved fairly to consumers.
Therefore all businesses, and especially those who regularly engage in promotional price activity, are urged to review the final draft of the proposed new PPG. While businesses are under no legal obligation to comply with it, those deemed to mislead consumers as to the benefit available in savings claims could face reputational damage (in addition to the adverse cost implications of having to withdraw their adverts).
Osborne Clarke LLP will closely monitor the progress of the final draft PPG and will report further on this topic in due course.