Who: The Advertising Standards Authority (ASA) and AHK Designs Ltd t/a Victoriaplum.com
Where: United Kingdom
When: 22 May 2024
Law stated as at: 12 June 2024
What happened:
The website page of an online bathroom retailer, Victoria Plum, stated “Since we were founded in 2001, we’ve gone on to become the UK’s online bathroom specialists, serving well over 2 million customers” and “Founded in 2001, we’ve been at the forefront of online bathroom buying for over 22 years“. The ad further stated that the company had “over 140,000 reviews” from customers rating it ‘excellent’ on an independent review website. The company’s social media accounts referred to company serving “2M+ customers“. The “about us” page on the company’s website also referred to an “Update: Business changes 2023” and included a link to another page of the website that explained changes to the ownership and administration of Victoria Plum.
The complainant understood that AHK Designs had acquired the right to use the “Victoria Plum” brand in September 2023 and, therefore, challenged the advertiser’s claims that it was founded in 2001 and about the amount of its clients.
AHK Designs said they had purchased Victoria Plum Ltd (VPL) in September 2023, after VPL went into administration, via a pre-pack purchase of VPL’s business and assets from administrators, meaning that the sale was agreed before VPL went into administration. AHK Designs continued to trade under the Victoria Plum brand since then. They also said that they brought VPL as a “going concern”, and intellectual property rights, including the goodwill in the business, were part of the purchase. Additionally, the business remained at the same place, with no major changes to staff, and the AHK Designs voluntarily took on various VPL’s liabilities and most supplier contracts. AHK Designs believed that after they had acquired the VPL brand, it effectively remained the same company, which continued to conduct its business without interruptions and therefore the claims were not misleading.
The ASA however upheld the complaints.
The ASA considered that claims such as that the company was founded in 2001 and have been trading for 22 years would imply that the VPL brand had been involved in uninterrupted trading from the date when it was founded in 2001, and until the present day. This would give consumers feeling of security when dealing with the company. The claims referring to “excellent” reviews from a vast amount of customers would lead consumers to think that Victoria Plum was an ongoing well-established business, with a long history of receiving high reviews and serving over two million customers.
The Committee of Advertising Practice (CAP) guidance states that when advertisers claim that their business has been established for a specific number of years or imply that it has been running for a long time, they should have documentary evidence in support of these claims. The guidance also says that when a company, buying an existing business, chooses to trade under that business’s brand and refer to its trading history, it should demonstrate that it had assumed the liabilities of the purchased business (for example, by paying its debts and honouring its guarantees).
In this case, the ASA was not provided with evidence that AHK Designs had honoured VPL’s customer contracts. Additionally, the “business changes” page on the Victoria Plum website stated that the company was not able to fulfil any orders that had been placed prior to VPL entering into administration. The company also was unable to accept any returns or provide any refunds on goods or orders, including for consumers that had not received their goods yet. The ASA understood that on the facts VPL has not been purchased as a “going concern” and, therefore, did not meet CAP guidance’s requirements that would enable the purchaser to adopt the brand heritage and refer to the trading history of the purchased company.
In relation to reviews, the ASA noted that when filtering the reviews on the independent review website to show only those submitted within the time after the purchase, just over 10,000 reviews were shown. The ASA concluded that most reviews related to the pre-purchase operation of the original business.
The ASA considered that the claims in relation to the company’s ongoing long history, amount of customers and “excellent” reviews were misleading because VPL had actually gone into administration and previous consumer orders had not been fulfilled.
Why this matters:
This ruling serves as an important guide for businesses purchasing another business and wishing to adopt their brand and history and using “established since” claims in these situations. This ruling shows that the purchaser will only likely to be able to use such claims when it has documentary evidence in support of these and if it had assumed the respective liabilities of the purchased business and can demonstrate this. It is also a reminder that businesses should be able to substantiate their claims by evidence to be able to show that they are not misleading consumers.
