Topic: Distance selling
Who: The Advertising Standards Authority and Izef LLC t/a Powerprecisiontrials.com and Beyond Nutra Ltd t/a beyondraspberrykeytone.co.uk
When: March 2013
Law stated as at: 1 May 2013
Recently, the Advertising Standards Authority (“ASA”) has investigated two cases about negative option offers i.e. commercial practices in which a seller takes a customer’s failure to take action (either by rejecting an offer or cancelling an agreement), as consent to be charged. This can pose consumers to serious financial risks; therefore material information must be disclosed.
1. Re: Powerprecisiontrials.com
A complaint was made against an ad which appeared on the Powerprecisiontrials.com (“Powerprecisiontrials”) website, www.powerprecisiontrial.com/newformula/uk – a US company based in Las Vegas (NV) USA – stating: “Hurry! Limited time special! … See if you qualify for our trial program … where do we send your trial order? Please enter shipping details” above a web form. Small print at the bottom of the page stated “Try Power Precision absolutely free, just pay a small shipping and handling fee. Your credit card will be charged shipping & handling for a 1 Month Supply of Power Precision.
You will have 14 days from your original order date to decide if Power Precision is right for you. If you are enjoying Power Precision do nothing and at the end of your 14 day trial period you will be charged the low rate of only £69.95 for the bottle you received. Approximately 30 days from your original purchase date and every 30 days thereafter you will be sent another 1 month supply of Power Precision and your credit card on file will be billed for £69.95 plus shipping and handling … Membership in the maintenance program may be cancelled at any time by calling customer service at [phone number] UK Toll Free”. The form linked to a payment page, which also included the same small print.
The issue was whether the ad was misleading by not making it sufficiently clear that consumers would automatically be charged on an on-going basis if they did not cancel within 14 days.
What Izef had to say
Izef did not respond to the ASA.
What the ASA had to say
The ASA upheld the complaint.
Main page: The terms and conditions (“T&Cs”) of the ‘trial’ were stated in small text at the bottom of a long web page and there was nothing to indicate to consumers that they would find T&Cs there.
Payment page: The T&Cs stated in this page were more prominent than those on the main page since the page was much shorter, although they were also in small print.
Charging consumers on an on-going basis if they did not cancel within 14 days was significant material information that needed to be made clear and drawn to the attention of consumers on the landing page and this failure amounted to a breach of the Code. In addition, Izef breached the Code for not responding to the ASA’s queries.
2. Re: Beyond Nutra Ltd t/a beyondraspberrykeytone.co.uk
The ASA also investigated a website of an English company based in Oxfordshire selling diet product, www.beyondraspberryketone.co.uk, which was headed “Beyond Raspberry KETONE LOSE WEIGHT AND FEEL GREAT WITH BEYOND RASPBERRY KETONE”. An arrow, towards a form where website visitors entered their name and contact details, stated “ACT NOW AND GET YOUR TRIAL!”. The form was headed “TELL US WHERE TO SEND YOUR TRIAL!”. Next to a tick box, text stated “I agree to the Terms and Conditions of this site”. The text “Terms and Conditions” was linked to a pop-up box which listed terms and conditions. Underneath that text, a button stated “RUSH MY TRIAL”.
The long web page included information about the product, its ingredients and ‘before and after’ images of people who had used the product. At the bottom of the web page, text stated “Get Your Trial Today!” next to a button labelled “RUSH MY TRIAL”. Clicking on the button took the website user back to the top of the page. Small print at the bottom of the page stated “Home | Contact Us | Terms | Privacy”. Clicking on “Terms” brought up the Terms and Conditions pop-up box. The terms and conditions included text which stated “The 14-day trial offer for Beyond Raspberry Ketone includes enrolment in our auto home delivery program, which is subject to the auto home delivery programme terms described below. The 14-day trial period starts the same day of purchase. We do not guarantee arrival dates or times … You will receive an e-mail notice confirming your order so that you know when your trial period starts and when your card has been charged for shipping and handling, or if you didn’t receive your e-mail [sic] … You must contact customer service before the end of the 14-day trial period to cancel and avoid further charges. If you do not cancel, we will charge £79.95 on the day your trial period ends … and you will continue with the auto delivery program”.
A complainant raised the following issues:
1. The ad was misleading i.e. it did not make clear that significant conditions applied to the promotion, e.g. the condition that consumers must cancel and return any unused product within 14 days or be charged £79.95 and be automatically enrolled into receiving a monthly supply at the cost of £79.95 per month;
2. The promotion had been administered unfairly i.e. they had not received an e-mail confirming when the trial would begin and end; and
3. The ad breached the Code i.e. it did not make clear the marketer’s geographic address.
What Beyond Nutra had to say
Beyond Nutra did not respond to the ASA.
What the ASA had to say
1. The ad was misleading – upheld.
The ASA considered that consumers would consider prominent claims such as “TELL US WHERE TO SEND YOUR TRIAL!”, “ACT NOW AND GET YOUR TRIAL!”, “RUSH MY TRIAL” and “Get Your TRIAL Today!” to mean that they were signing up only to receive a trial bottle of the product, for which they would not be charged.
Although the T&Cs in the pop-up box included information with regard to the charges that would be incurred if consumers did not cancel and return the product within 14 days; however, the information, which was likely to influence consumers’ decisions and understanding about the promotion, had to be presented clearly to consumers.
Including material information only in a pop-up box linked to small text was not sufficient: all references to the ‘trial’ in the main body copy of the ad should have been immediately followed by qualifying text which made clear that charges would be incurred if consumers did not cancel within 14 days.
2. The promotion had been administered unfairly – upheld.
The ASA noted that the T&Cs in the pop-up box stated “You will receive an e-mail notice confirming your order so that you know when your trial period starts…”. Since the complainant has not received such an e-mail and therefore had not been fully informed of the date by which they had to return the product if they were to avoid being charged, the promotion had not been conducted equitably, promptly or efficiently and had not dealt fairly and honourably with participants.
3. The ad breached the Code – not upheld.
The Code requires distance selling marketing communications to provide a geographical address. Since the T&Cs pop-up box, and a web page accessed through the “Contact Us” link at the bottom of the web page, included a geographical address for the advertiser, the ad did not breach the Code.
In addition, Beyond Nutra breached the Code for failing to respond to ASA’s enquiries.
Why this matters:
Material information: Both cases highlight the importance of bringing to the consumers’ attention any relevant material information which is likely to influence their decision and understanding about the promotions. This means that stating material information in small text at the bottom of a long web page (with nothing to indicate to consumers that they would find T&Cs there) or in small print on the payment page is not sufficient to comply with the Code.
Comply with the T&Cs: promoters have a duty to conduct promotions equitably, promptly and efficiently acting fairly and honourably with participants. This means that they must act in accordance with what is stated in the T&Cs.
In addition, both companies have failed to respond to the ASA’s enquiries showing an apparent disregard for the Code. The ASA have reminded them of their responsibility to respond promptly to our enquiries and told them to do so in future.
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