The acceptable limits of three popular types of price claim were highlighted by recent enforcement cases
Topic: Prices
Who: BT, Tempo and Time Computer Systems
When: November and December 2000
Where: UK
What happened:
The acceptable limits of three popular types of price claim were highlighted by recent enforcement cases. The Gravesend branch of national electrical goods retailer Tempo labelled products on display "Priced to clear" without showing a previously charged higher price. Of itself this was contrary to the Code of Practice for Traders on Price Indications, the "Highway Code" for retailers and advertisers to help avoid giving a misleading price indication and committing an offence under the 1987 Consumer Protection Act. What was worse was that some of the products in question were only reduced in price by 5p or 15p, while others had actually gone up, in one case by nearly £70. Tempo pleaded guilty to five specimen charges and was fined £17,000 with costs of £1,130.
In TV ads BT described the monthly 200 minutes of calls included in their "Together" package costing £11.99 a month as "Free minutes." The ITC reminded BT of the ITC Code rule that products should not be described as "free" unless they are supplied at no cost or no extra cost to the recipient. As the 200 minutes were an integral part of a package costing £11.99 a month and not a separate product received at no extra cost, the word "free" was ruled inappropriate and further showings of the commercial in that form prohibited.
Finally a competitor of computer retailer Time complained to the ITC about a Time TV ad announcing "Get up to £600 trade-in for your old PC." The ITC noted that to achieve the £600 trade in price a relatively new or high spec PC would have to be offered. Time estimated that 35-40% of its customers had received £300 or more in trade-in for their computers. This was a far cry, however, from the ITC Code rule that "up to £X" claims are only justified if a significant proportion of punters could reasonably expect to benefit from the offer quoted. Further uncorrected showings of the ad were prohibited.
Why this matters:
These price claim rules are all well established and based on the fundamental requirement that price indications must not be misleading. BT and Time can be thankful that they ran foul of the TV ad code version of the rules and the TV content watchdog the ITC rather than the Consumer Protection Act and the magistrates court. Although it does not officially give immunity from prosecution, ITC enforcement action under the ITC Code is rarely if at all followed by a summons to appear before the local magistrate under the Consumer Protection Act.
