Who: Advertising Standards Authority (“ASA”)
When: 21 August 2017
Law stated as at: 26 October 2017
The ASA recently published an opinion on dynamic pricing in travel ads and the propensity of such ads (in the ASA’s view) to attribute value to non-existent savings.
The ASA highlights problems related to dynamic pricing in the travel and holiday sector, where prices fluctuate due to both changes in suppliers’ costs and demand. It acknowledges that these changes are not themselves a problem because they allow consumers to benefit from low prices.
However, according to the ASA, an issue arises when ads include notional discounts on dynamically-priced goods because the discount cannot be proven. This, says the ASA, is in breach of the relevant advertising codes which state that advertisers must be able to substantiate any claims in ads. It is not always possible to prove that the pre-discounted price was a genuine selling price where the goods or services are priced dynamically and the prices are constantly changing.
The ASA considers that pricing of package holidays is a key example of this because of the sheer number of moving prices and fluctuating parts – including hotel rooms, flight costs and agents’ commission. The price of all of these individual parts will fluctuate depending on demand and the price of a package holiday could alter several times during the course of a day.
The opinion goes on to highlight a number of recent ASA rulings where advertisers had not done enough to document and substantiate a meaningful saving.
The ASA feels that this could mislead consumers into believing that the package is better value than it actually is and would stop consumers from shopping around.
Why does this matter:
The issues highlighted by the ASA are likely to extend beyond the travel industry, especially with the growth of internet sales.
The ASA has included a number of recommendations for advertising savings claims in relation to dynamically priced goods and services, including:
- Using discount codes to provide genuine and self-verifiable savings. The ASA praised TUI’s recent approach of giving consumers a code (SALE100) to use at the checkout and apply the discount. This meant that consumers were able to make a direct and simple comparison between the pre- and post-discount prices.
- Using a provable claim such as “cheapest this month”. The ASA feels that the pricing history should provide sufficient substantiation for a claim of this nature.
- Comparing online and brochure prices, although the advertiser would have to be able to prove that a reasonable proportion of packages had been sold at the brochure price.
These are not the only methods of ensuring that ads are compliant. Any advertisers featuring savings claims in relation to dynamic pricing must remember that they have a duty not to mislead consumers.