Who: DSG Retail Limited (trading as Currys). The Advertising Standards Authority (“ASA”).
When: Adjudication published on 29 April 2015
Law stated at: 7 May 2015
Customers love a good discount and retailers love to use them as a sales tool. However it is important that such claims stay within the bounds of what is acceptable and do not stray into the territory of misleading advertising.
Discount on a £249 soundbar advertised
UK electricals retailer DSG Retail Ltd, better known by its trading name “Currys”, found itself on the wrong side of the ASA in respect of a discount it advertised in a TV campaign. The advert ran on 27 November 2014, and made the following claim in the voice-over:
“… we’ve got our best deals at our black tag event … LG wireless sound bar, only £159, save £90″.
The verbal claim was accompanied by some large on-screen text stating “£159 SAVE £90″, and some smaller text stating “Higher price £249 from 24/7 – 13/8/14″ (emphasis added).
Soundbar bought for £179.99 the previous week
A member of the public had purchased the same wireless soundbar from Currys for £179.99 the previous week. The customer felt that the claim (which was presumably brought to his/her attention by the soundbar in question ) was misleading and complained to the ASA. The ASA looked into whether it was OK for Currys to claim that £90 had been knocked off the price, when the reference price was over 3 months old.
Other prices in the interim
In the ASA’s investigation, it came out that although the advert stated the dates that were the basis of the comparison, the price of the soundbar had (with the exception of two days) been consistently lower than £249 from 13 August until 27 November. For half of that time it had been offered at £179.99. It had also been £199.99 and £229.99 for several weeks.
Currys: not misleading, in compliance with BIS Guide
In its defence, Currys argued that it was not misleading to use a “was” price from an earlier period, as the basis of the claim was made clear by the small print. The advert was in compliance with the BIS Pricing Practices Guide (the “BIS Guide”), they argued. In particular, the intervening prices had not been lower than the sale price, which would have triggered the requirement under paragraph 1.2.1 of the BIS Guide for it to state the intervening prices. There was therefore no requirement for Currys to state these, the retailer said.
What the BIS Guide says
The BCAP Code requires advertisers to have regard to the BIS Guide when advertising prices. It states at paragraph 1.2.1 that comparisons with previous prices should generally be with the advertiser’s immediately previous price for that product. However the BIS Guide goes on to state that comparisons with earlier prices may be acceptable, provided that such prices are fewer than six months old and that the basis of the comparison is made explicit.
The advertiser should also state if the product has been on sale at an even lower price (than the sale price) for any significant period since the price stated. In the Currys case the interim prices were not lower than the sale price, but were lower than the reference price, something not specifically prohibited in the BIS Guide.
Advert still misleading, says ASA
Regardless of there being no particularly clear breach of specific guidelines in the BIS Guide, the ASA did not accept Currys’ arguments. It ruled that the ad was misleading and breached a number of rules of the BCAP Code: rule 3.1 (Misleading advertising), 3.9 (Substantiation), 3.10 (Qualification) and 3.18 (Prices). The ASA clearly felt that the pricing strategy adopted still fell afoul of the BCAP Code’s prohibition on price statements that “mislead by omission, undue emphasis or distortion”. The ad was not to be shown again in its current form.
In its ruling the ASA makes clear that it decided against Currys because the small explanatory text in the ad did not override the impression that would be given to customers that the £90 discount was against the usual selling price of the soundbar. According to the ASA, the higher price of £249 was therefore not a genuine representation of the price at which the product was usually sold and the savings claim based on it was accordingly misleading.
Why this matters:
While it is possible to make savings claims based on reference prices up to six months old without contravention of specific provisions of the BIS Guide, advertisers should be wary of doing so, particularly if the product has spent the majority of time since the reference price quoted available at a lower price than the reference price (albeit higher than the sale price). The BIS Guide states at 1.2.3. that “the basis of a price comparison should be reasonable in terms of time, and what is reasonable will depend on the circumstances”.
Advertisers should continue to use paragraphs 1.2.1 – 1.2.11 of the BIS Guide to help identify whether price reduction claims are likely to be acceptable. However they should also consider the recent pricing history of the product holistically, with a view to identifying the price at which the product is usually sold. This adjudication indicates that the ASA may expect any reference price used to reflect this, in addition to the BIS Guide suggestions.