In an extraordinary coincidence, within six days, before two different tribunals, two ‘70% off’ offers were held to break the rules. We report on the court and Advertising Standards Authority deliberations.
Topic: | Prices |
Who: | (1) Floors-2-Go and the Advertising Standards Authority (ASA) (2) Officers Club Limited and The Office of Fair Trading (OFT) |
Where: | The ASA and the Chancery Division of the High Court |
When: | June 2005 |
What happened: |
In two quite separate cases reported within five days of each other, different companies were under the regulatory cosh in different fora over "70% off" claims.
In the first case, it was retail clothing store chain Officers Club who were on the wrong end of proceedings by the OFT under the Control of Misleading Advertisements Regulations 1988. The proceedings were for an order restraining Officers Club from publishing advertisements that the OFT claimed were misleading. The ads were placed in store windows promoting and explaining a 70% discount scheme.
How it worked was that a limited number of items was marked at the full price in a small number of the defendant's stores for 28 days, and then sold after that time in all stores at a 70% discount.
Genuine discount?
Although the practice conformed with the letter of the "Code of practice for traders on price indications" published under the Consumer Protection Act 1987 (which criminalises misleading price indications) the OFT argued that the practice was still misleading. Their reasoning was that the ads made a false, implied representation that the 70% discount was genuine, as opposed to artificial. There was also an implied representation, the OFT argued, that significant quantities of the goods had actually been offered for sale at the higher price for a period of not less than 28 days in the preceding six months in the honest belief that they could be sold at that price. These representations were false and misleading, the OFT submitted, and the price comparison was therefore not "fair and meaningful" within the requirements of the 1987 Act, whatever about the Code.
Officers Trading defended, but Chancery Judge Etherton rejected the retailer's arguments and granted the OFT their order banning further advertising of the 70% discount offer.
Floors-2-Go
In the Floors-2-Go case, the problematic marketing communication was a TV commercial promoting a Floors-2-Go spring clearance. The ad said "no ifs, no buts, we have reduced every single range and there are amazing discounts of up to 70% off". Later in the ad, the voiceover said "with every range reduced and with up to 70% off". Four viewers had visited the same Floors-2-Go store in Salford and were disappointed to find that only selected items in each range benefited from any discount. They complained to the Advertising Standards Authority on the basis that the impression given by the ad was that all flooring in each of the available ranges was reduced.
Floors-2-Go defended on the basis that thousands of customers had visited its stores and had been very happy with the purchases made, whilst they had made every effort to ensure that at least one product from each range was reduced. The ASA accepted that this was the intention of Floors-2-Go, but they felt the ad was unclear on the point and could leave viewers with the overall impression that all the flooring in all of the ranges named had been reduced. Accordingly, the ad was held misleading and the complaint upheld.
Why this matters: |
Ever since the introduction of the Code of Practice for Traders on Price Indications under the Consumer Protection Act 1987, it has been made clear that compliance with the code does not necessarily guarantee immunity from prosecution under the 1987 Act. From the reports to hand, the evidence supporting the OFT claim that the full "pre-70% discount" prices of the items in question were not genuine is unclear. The court appears to have been quite satisfied, however, that there was no serious intention on the part of Officers Club to sell any of the full price items in question. The court goes on to make the interesting assertion that it was a facet of a genuine price that the seller honestly believed that the price was appropriate for the goods.
In the Floors-2-Go case, the retailers sincerely believed that by ensuring that within each range at least one product benefited from a discount they had ensured conformity with the claims in the ad. The potentially broad ambit of "with every range reduced" however was always going to be at the very least ambiguous and one feels that they cannot have had any great quibble with the upholding of the complaint.
