Who: The Advertising Standards Authority (ASA); the Committee of Advertising Practice (CAP); and the Broadcast Committee of Advertising Practice (BCAP).
Where: United Kingdom
When: 1 December 2020
Law stated as at: 22 January 2021
The ASA has issued guidance through CAP and BCAP in relation to marketing communications for delayed payment services. These services allow payment for goods or services to be deferred for certain periods of time, and often involve charging no interest, are usually integrated into the checkout process for online retail and either only charge the full amount after a set period, or charge in weekly or monthly instalments. The guidance aims to ensure that consumers have sufficient information in order to understand what the service is, how payment will be taken and the nature of any fees or penalties to which they may be subject.
Guidance relevant to all marketing:
- Make it clear that delayed payments are a form of credit. Prospective customers may not be entirely aware that in deferring payment they are in fact taking on a form of debt. This could mean a lack of appreciation of late payment fees and subsequent referral to debt collection agencies. The nature of delayed payment services as a form of credit is material information likely to impact on a customer’s decision to use the product and so advertisers should ensure that marketing does not imply otherwise.
- Consider explaining any consequences on customers’ credit scores. While not all credit scores are affected by “soft” credit checks carried out as part of delayed payment services, CAP and BCAP acknowledge that credit scores are calculated differently and in some instances the use of certain credit types can influence a customer’s ability to obtain further credit. Therefore, unless it can be demonstrated that using the service will never impact a customer’s credit score or ability to obtain further credit, providers should not claim that using the services will have no consequences.
- Do not imply that delayed payment services are suitable for all customers. Some customers may have difficulty with managing their finances and so marketing these services should not suggest that they are suitable for all or are an entirely risk-free way of obtaining credit.
- Include terms and conditions. Adverts for financial products, under the CAP Code, must state “the nature of the contract being offered, any limitation, expense, penalty or charge and the terms of withdrawal” unless the advert is very brief or general, in which instance the information should be freely available. CAP requires links to provide information, and similar expectations are likely to be interpreted under BCAP.
Guidance specific to online checkout:
- Nature of delayed payment services should be clear to customers. Where the delayed payment service is offered by way of card detail entry, this is particularly important as it may not be clear to a customer that it is any different to paying by card.
- Significant conditions (fees, penalties and payment schedules) should be clear as part of the checkout process, not just via a link. Customers must be given access to full terms and conditions of service prior to deciding to use the service.
Why this matters:
Advertisers offering delayed payment services will need to heed the guidance in order to remain compliant. One particular action to take will involve providing transparency over the services’ nature as a form of credit. Advertisers will also need to take into account the fact that customers should be given all appropriate information, especially considering that individuals’ financial standing may make the services inappropriate.