Topic: Prices
Who: Advertising Standards Authority, TalkTalk Telecom Ltd trading as TalkTalk
Where: UK
When: 17 April 2013
Law stated as at: 2 May 2013
What happened:
The ASA prevents a free for all.
The word “free” has always been a good way of getting the public’s attention. However, the Advertising Standards Authority (“ASA”) has always been keen to ensure that its power is not abused. The use of the term is therefore subject to strict rules in the ASA’s CAP and BCAP codes, covering both non-broadcast and broadcast advertising.
Unsurprisingly this keeps the ASA’s enforcement arm busy rapping the knuckles of advertisers whose use of the term has caused members of the public (or competitors) to cry foul.
A free box…?
One of the latest rulings of the ASA to be released concerns a TV ad and associated direct mailing for TalkTalk, both of which ran before Christmas 2012. The TV ad had a voiceover as follows:
“This Christmas unwrap TalkTalk’s amazing TV package with unlimited broadband and calls. Your free YouView box lets you pause, record and rewind all the Freeview channels you love”.
The commercial featured a picture of the box in question wrapped in ribbon, and text stating “FREE YouView Box”, with further superimposed text stating “…£50 installation fee”.
The direct mailing consisted of a letter and a leaflet. The letter stated
“Today, we are very pleased to offer you as a valued Plus customer, TV with a Free YouView Box… Register to receive your free YouView Box. Please take the time to read the enclosed leaflet to find out how to register to receive your Free YouView Box”.
The small print stated, among other things “£50 engineer installation fee and terms & conditions apply”.
The leaflet had a headline stating “A FREE YouView Box for your home*”. The asterisk linked to small print, which had similar wording to the small print in the letter.
… or a fee for the box?
This promotion was the subject of a complaint to the ASA by a disgruntled recipient who felt that the claims that the YouView box was free were misleading, as there was a mandatory £50 engineer installation fee.
TalkTalk mounted a robust defence of their position, claiming that they had followed the ASA’s own guidance on the use of “Free” when setting up the offer (link to this at the bottom of the article).
• The TV package offered was established in the marketplace prior to the offer, and the price was not varied when the YouView Box was added, nor was the quality reduced (both no-no’s under the codes).
• The package could be purchased separately from the YouView box, in which case the price of the package would be the same.
• The engineer cost was a genuine cost solely related to the activation of the YouView box and had not been artificially inflated to recover the cost of the box. Both ads made clear that there was a £50 installation charge. Such a charge was standard industry practice.
• Clearcast – the body responsible for clearing adverts for broadcast – backed up TalkTalk’s position. They understood that the £50 installation fee was a one-off cost, and therefore complied with the ASA’s guidance on the use of “free”. The passage of this guidance quoted states “Other types of one-off, up-front costs, for example for both conditional purchase promotions and packages, one-off up-front costs incurred, for example, to buy equipment… do not negate claims that products or services supplied without subscription are ‘free’” (emphasis added).
TalkTalk fail to get off scot-free
The ASA spent the best part of two paragraphs of its adjudication detailing why TalkTalk’s submissions above were correct. However, in a dramatic twist, the ASA then proceeded to uphold the complaint. TalkTalk’s defence foundered on the ASA’s conclusion that the YouView box and the £50 installation fee were “inextricably linked.”
The two key findings on which this was based were:
(a) the installation fee was payable to TalkTalk rather than a third party; and
(b) consumers who would have liked to install the box themselves would still have to pay the £50 installation fee.
Strict reading of the guidance?
On (a) the ASA relied on another part of its guidance note which follows on from the passage quoted by ClearCast, namely that “Other types of one-off, up-front costs, for example connection fees payable to a third party to activate an internet service, will also not negate claims that the internet service is free, provided the price payable has not been inflated to recover the cost of supplying the free service.” (emphasis added).
It seems that the ASA took a narrow reading of the guidance in this case. The paragraph in question in the help note might be read as indicating a wide exception for “one-off up-front costs” which it illustrates with examples (buying equipment; buying a telephone for a free phone line; buying digital receiving equipment to receive digital free-to-air channels; connection fees payable to a third party to activate an internet service). However, it seems that the given examples are to be interpreted strictly so the “third party” element must be present in the case of connection fees and similar scenarios for the exception to apply.
Why this matters:
The ASA continues to carefully police the use of “free”, and is prepared to take narrow readings of its own guidance where necessary to crack down on perceived abuses.
Set-up fees for otherwise free products which are payable directly to the advertiser rather than third parties should be treated with caution.
http://www.cap.org.uk/~/media/Files/CAP/Help%20notes%20new/Guidance_use_of_free.ashx
