Tesco, Toys R Us and Ryanair were all recently hauled before the Advertising Standards Authority on charges of breaching the “Availability of products” rules of the CAP Code. Ray Coyle tries to find some consistency in the findings.
Topic: Misleading advertising
Who: Tesco, Toys R Us, Ryanair and the ASA
When: February 2008
Law stated as at: 29 February 2008
The issue of advertising goods or services where there is limited availability has cropped up three times in the last month in complaints lodged against Ryanair, Toys R Us and Tesco. Unfortunately, the ASA adjudications do not indicate a consistent approach to the obligations of advertisers in such circumstances.
The British Code of Advertising, Sales Promotion and Direct Marketing (the "CAP code") states at rule 16.1:
"Marketers must make it clear if stocks are limited. Products must not be advertised unless marketers can demonstrate that they have reasonable grounds for believing that they can satisfy demand. If a product becomes unavailable, marketers will be required to show evidence of stock monitoring, communications with outlets and swift withdrawal of marketing communications whenever possible."
The wording of the code is not particularly helpful as all stocks are finite and therefore "limited" and it is only in circumstances where advertisers believe that they will not have sufficient stock to meet demand that they will, in reality, consider their stock to be limited. However, advertising "limited availability" in these circumstances would appear to breach the second sentence of rule 16.1.
Given the ambiguity in the rule itself, it is particularly important that the ASA enforces it consistently so that there is certainty in the marketplace and companies can confidently advertise limited availability promotions. However, the approach in the three adjudications below does not appear to achieve that consistency.
Flights were advertised at "£10 All In" and stated to be "subject to availability". A complaint was made to the ASA about both the availability and the price of the flights. Although the ASA held that the price quotes should have been "from £10 All In", they did not expect Ryanair to believe that they would be able to satisfy demand for the £10 flights.
The ASA assessment states "We considered that the report Ryanair supplied demonstrated that quoted fares were available in sufficient quantities to ensure a reasonable prospect of readers obtaining a flight at the advertised price…". This mirrors the wording of the ASA Help Note on Travel Marketing (found here) but certainly seems a different test to that contained in rule 16.1.
Accordingly the complaint was not upheld.
Toys R Us
The long standing excess of demand for Nintendo's Wii console has been widely documented and commented on. When Toys R Us knew that they would be receiving stock, they quite rightly anticipated a high level of demand and their advertising stated "1 per customer, stock allocated on a first come first served basis". Demand was, to say the least, high and customers started queuing outside many stores on Friday night. On Saturday morning, all of the stock sold out "almost at once" leaving many customers disappointed.
The ASA concluded that Toys R Us had made a "reasonable estimate of the demand" and "had shown that they had a significant number of Nintendo Wii's in stock for that week-end" and therefore the advertisement did not breach rule 16.1.
A variety of electrical goods were advertised by Tesco at reduced prices and stated to be "strictly limited to a maximum of one of each item featured per customer" and "subject to availability". Customers were also encouraged to "Hurry, while stocks last". Stock of three items ran out on the first day. In the case of two of the products, Tesco claimed that they had not received their full allocation from their supplier but did not provide evidence of this to the ASA.
Although the ASA accepted that Tesco had made it clear that the stock was limited, they considered that this did not relieve them from responsibility for "taking all reasonable steps to avoid disappointing participants". This wording is taken from rule 27.3 on sales promotions and was not considered in either the Ryanair or the Toys R Us adjudication.
On this count, the complaint was upheld.
Why this matters:
It is vital that advertisers have clear guidance on how they should communicate "limited availability" offers to the public and what their obligations are in respect of stock levels. It is entirely unrealistic to expect advertisers to be able to meet all demand and, if they could, they would hardly advertise availability as being limited.
Unfortunately, there seem to be three possible levels of obligation on the advertiser:
- Customers must have a reasonable prospect of obtaining the product (Ryanair);
- The advertiser must make a reasonable assessment of demand and acquire "significant" stock (Toys R Us); or
- The advertiser must take all reasonable steps to avoid disappointing customers (Tesco).
Most companies that deal with the public will, either through choice or necessity, advertise goods for which the availability is limited. As things stand, it is difficult to predict, when doing so, exactly what the ASA will consider the advertiser's obligations to be under the CAP Code.