Who: BMW (UK) Ltd and the Advertising Standards Authority
When: March 2014
Law stated as at: 7 March 2014
The Advertising Standards Authority received a complaint about a press insert advertising the BMW 318d Sport. On the cover were the headlines “Arrive on time and on budget.” and a reference to 5 years’ comprehensive insurance cover being “Included from £299 a month.*”
At the asterisk on page 4 was more information including “Offer available to business users only. Retail offers also available. Figures exclude VAT at 20%.”
The complaint centred on alleged lack of clarity as to the availability of the advertised deal to non-business users and the quoting of VAT-exclusive prices.
BMW said in its defence that the “business users only” clarification was in bold print and also that it had a higher proportion of sales users than most other car brands.
On the VAT-exclusive prices, the advertiser referred to CAP Code 3.18, which states “VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such …prices must be accompanied by a prominent statement of the amount or rate of VAT payable.”
Advertising not targeted specifically at business users
The ASA held that notwithstanding the “Business users only” qualification, the insert had not been targeted specifically to business users. The insert appeared in national papers and car magazines that were likely to be read by members of the public.
It was therefore necessary to make the “Business users only” qualification quite clear. This requirement was not satisfied, the regulator said, by including the disclaimer on page 4. Although this was in bold print, it was in smaller print than that of the rest of the ad, the ASA found. Therefore CAP Rules 3.1, 3.3 (Misleading advertising) and 3.9 (Qualification) had been breached.
“Offer available to business users only” not clear that prices not for consumers
On the VAT-exclusive prices, the ASA held that the words “Offer available to business users only. Retail offers also available. Figures exclude VAT at 20%” did not make it sufficiently clear to consumers that the prices were applicable to business users only and not to members of the public.
The ASA also considered that linking the prices quoted to terms and conditions which included a statement that 20% VAT was payable did not make this information sufficiently prominent.
Therefore the ASA found breaches of CAP Rules 3.1, 3.3, 3.4.3 (Misleading), 3.9 (Qualification), 3.17, 3.18 and 3.19 (Prices).
Why this matters:
The ASA accuses BMW of lack of clarity, but the ASA’s finding on the VAT-exclusive price issue is not as clear as it might be.
It seems to be saying that there were two ways in which the qualifying wording was unclear. Firstly, due to the wording itself and secondly because of its positioning.
But on the words used, to mangle a retort often used by exasperated parents, which particular part of “”Offer available to business users only. Retail offers also available. Figures exclude VAT at 20%” was “insufficiently clear” as to the prices quoted being unavailable to non-business users?
Given the likely readership, was more clarification needed?
Was it the absence of words spelling out that non-business buyers would have to pay the prices quoted plus VAT? For example should it have said: “Non-business users will have to pay the prices quoted plus VAT.”? Was this really necessary given the likely readership?
And in any event, the insert could not have said this because the finance offer advertised was unlikely to be available to consumers in the same way, but just with VAT added. Hence BMW’s more appropriate qualification: “Retail offers also available.” But was the problem with this that the ordinary consumer would not understand that “Retail offers” did not apply to business sales? Surely potential BMW buyers are savvy enough to know the difference?
Also far from clear is the finding that linking the headline prices to the “business users only/VAT exclusive” wording in the terms and conditions “did not make this information sufficiently prominent.”
First even if it had been prominent enough, the regulator had just found that the wording in question was itself “insufficiently clear,” wherever it was located.
So must all headline prices at least mention VAT amount/rate?
Secondly, the ASA does not suggest that the locating of the terms and conditions on page 4 was the problem, rather it seems to be the very fact that the disclosure was in wording linked to the headline prices.
Based on this, it seems that the only way to compliantly quote VAT exclusive prices, even if the “business users only” rules have been followed, is to state the amount or rate of VAT in the same place as the VAT- exclusive price. In this case, that would have been the headline. This seems a very strict approach to what is “sufficiently prominent.”
CAP Code alone in regarding business users as “consumers”
Another confusing factor is that the CAP Code is just about the only set of rules governing UK advertising which defines the term “consumer” as including business buyers.
It is not always clear that the ASA follows this approach in its own adjudications. “Did not make it sufficiently clear to consumers that the prices were applicable to business users only” for example seems to be lapsing into the convention adopted by most other UK ad rules and using “consumer” to mean non-business users.
Be that as it may, couldn’t the ASA have avoided all this confusion by simply finding that because it had already held that the advertising was not clearly addressed to business users, all prices quoted had to be VAT-inclusive as required by CAP Code 3.18? Perhaps we should be told.