Who: Advertising Standards Authority (“ASA”), Marcậndi Limited (“Marcậndi”), Sophora Media Limited (“Sophora”), Bidbid.co.uk (“Bidbid”), Blionix Ltd (“Blionix”), Fastbidding Ltd (“Fastbidding”) and Systematic Entertainment Shopping Ltd (“SES”)
Where: UK
When: 23 February 2017
Law stated as at: 17 March 2017
What happened:
The ASA published a series of rulings relating to misleading advertising claims by pay-per-bid auction websites. This follows increasing ASA action in the area of pay-per-bid auction websites, with the ASA clearly concerned that companies operating in the area are misleading consumers.
Pay-per-bid auctions (often known as penny auctions) are a form of timed online auction where consumers pay to bid on items. Consumers usually pay for the bids through pre-bought credits. These auctions attract attention due to the low prices advertised – for example, claims that new cars are available for less than £500.
Miles Lockwood (Director of Complaints and Investigations at the ASA) stated that, “Our rulings and guidance put pay-per-bid auction businesses on notice; they need to get their websites in order so that consumers get a fair deal.”
The ASA identified a number of issues with sites operated by Marcậndi, Sophora, Bidbid, Blionix, Fastbidding and SES, including:
- the use of exaggerated claims about RRPs, potential savings and the auctioned item’s “sold prices”;
- Uunclear information for consumers about how the auctions work (for example Marcậndi did not make it clear that consumers can only win an auction a limited number of times in a month) and the costs involved;
- hiding important information about the services in complex and non-consumer-friendly terms and conditions;
- only providing key information about the services once the consumer has registered with the relevant site;
- use of inappropriate or incorrect testimonials, such as the advertorials on the Daily Mirror and Daily Mail websites; and
- failure to identify advertising content to consumers and differentiate it from editorial content;
CAP simultaneously published guidance which sets out the main pitfalls for pay-per-bid auction sites and how to avoid these, including:
- not exaggerating savings claims and ensuring that any claims can be substantiated;
- clearly setting out the terms and conditions to the consumer (before they register on the site);
- ensuring that any testimonials or endorsements do not mislead consumers; and
- ensuring that all ads are clearly identifiable and distinguished from any editorial content.
Why this matters:
The ASA is clearly concerned by the marketing practices within the pay-per-bid auction sector. These rulings emphasise that businesses operating in the sector must ensure that they comply with advertising regulation, and specifically CAP’s guidance, or risk being subject to a future ASA ruling.
