Who: Money Expert Limited and the Advertising Standards Agency (“ASA”)
When: 10 July 2013
Where: United Kingdom
Law stated as at: 29 July 2013
What happened:
Mighty Deals is a website run by Money Expert Limited, one of the UK’s largest comparison websites. The Mighty Deals website offers discounts on a range of products and services from holidays to horticulture and from food to fashion. When consumers pay for their discounted item with Mighty Deals, they are sent a voucher for the requisite amount which can be redeemed with the stated seller. Most offers state the percentage saving that consumers will enjoy when compared against the full price of the product or service.
One such offer boasted: “Philips Senseo Coffee Pod Machine £44.99 Discount: 55% Worth: £99.00″. However, smaller text stated “Delivery is an additional £6.99 per item” and referred users to the “Company Website” through a link to the website of Atlantic2U, the party with whom the voucher would be redeemed. A complainant objected to the fact that the advertised saving of 55% was exaggerated because it excluded the cost of delivery of the item which would decrease the overall percentage saving and filed a complaint with the Advertising Standards Authority (ASA).
Mighty Deals response: Delivery cost was justified
Mighty Deals responded to the complaint by highlighting the terms and conditions clearly stated that the £6.99 delivery cost was over and on top of the product cost. As the 55% saving which was advertised was the difference between the original price which Philips had set as the RRP for the coffee machine and the offer price, the advertiser did not consider any exaggeration to have occurred. By way of illustration, Mighty Deals referred the ASA to another retailer who sold the product at a price of £99.99 with an additional delivery charge in excess.
One of the main points which Mighty Deals was forced to defend was that Atlantic2U sold the product at £99 with free delivery included.
Although Mighty Deals acknowledged this, it argued that the voucher redemption system was processed in a different way whereby Atlantic2U provided Mighty Deals with the product and Mighty Deals set the P&P amount. The link was said to have been displayed merely so that customers could see who was supplying the coffee machine.
ASA adjudication: Delivery to be included
The ASA did not accept Mighty Deals’ justification. Ultimately, the advertiser’s downfall was that the ad expressly set out that the saving was 55% of the Atlantic2U price. When Atlantic2U’s price of £99, including delivery, was compared against the total price of £51.98 including delivery that the consumer would pay as part of Mighty Deals offer, the saving in fact amounted to 47%. The ASA also noted that it was possible to buy the product from the Philips website for £100, a price which included standard delivery. Therefore again, even if this was used as the basis for the price saving, the overall discount offered by Mighty Deals was less than the stated 55%.
As a result of the above, the ad was deemed to be misleading to customers and in breach of the CAP Code’s provisions on misleading advertising, prices and price comparison.
Why this matters:
Advertisers should be wary when promulgating discounts by way of comparison that delivery costs may have to be accounted for.
Whether this is compulsory in all cases is not fully clear. Indeed, in the above circumstances, had Mighty Deals not highlighted that the comparison was being made against Atlantic2U who offered free postage and had it made it absolutely clear that the advertised percentage discount was against the price of the good alone excluding P&P (rather than merely stating that delivery was also payable), the ASA may have viewed the case differently.
If an advertiser is promoting a product by highlighting the financial saving, it is conceivable that not taking the postage into account at all would be acceptable if the same postage fee had been applicable to the good before and after the discount. However, in the interests of covering all bases, a prudent advertiser would base the comparison on the total cost that the consumer would have to pay, including postage fees and handling charges, at the lower price and, if applicable, the higher price.
