The art of advertising

Adam Bernstein discusses the pitfalls in promotion

Published:  14 February, 2017

We live in a highly competitive world where trade is no longer confined to traditional markets. Consumers now come from far and wide and firms are competing with sales from the web as well as the high street; the need to advertise has never been stronger.

But despite this, one thing has not altered; the need to follow the rules when it comes to advertising. Yes, to an extent a firm can do what it wants. However, by ignoring the rules a tailwind of discomfort is sure to follow.

So consider the recent trouble with the Advertising Standards Authority (ASA) that car dealership Peter Vardy found itself facing recently. The case involved the company's website, www.petervardy.com, that featured a picture of a car with a speech bubble containing the text "save 43%". Text on the right-hand side stated, "PRICE WHEN NEW: £20,939 FROM: £11,999 SAVE: £8,940. Text further down the page, under the heading "Specification", stated, "CASH PRICE Our Price £11,999 Price When New £20,939 Saving £8,940 Limited Time Offer". The complainants, who understood the ad compared the price of a used car against its list price when new, and who believed such a comparison was not a fair one, challenged whether the claimed saving was misleading. The ASA upheld the complaint.

Others, including Audi (August 2016), TJ Hamilton & Company Ltd (July 2016) and BMW (July 2016) have fallen foul of the rules too. In fact, a quick search of the ASA finds some 215 cases that refer to 'car' in its rulings. A not insubstantial number.

Starting with the ASA, the UK's independent regulator of advertising across all media, it applies two codes of practice - CAP and BCAP Codes - which it uses to regulate non-broadcast and broadcast advertising respectively.

But Donald Mee, an associate at Harbottle & Lewis LLP, says that the Consumer Rights Act 2015 (CRA) is also relevant; this sets out consumers' rights and remedies for defective goods, services and digital content. Says Mee: "Any public statements made by a retailer about goods (including those in advertising) will be relevant in assessing whether the goods comply with the quality standards set out in the CRA. For services, anything that is said or written to the consumer by the provider about it or the service will be deemed to be part of the contract for the service, provided that the consumer takes it into account when deciding to enter the contract or makes any decision about the service after entering into the contract. Deciding to upgrade to a protective car paint coating is a good example."

Retailers should also be aware of the Consumer Protection from Unfair Trading Regulations 2008 (CPR's). The premise behind the CPR's is simple - they prohibit any unfair, misleading and/or aggressive commercial practices. Further, as Mee notes, "they also set out 31 'blacklisted' practices that are expressly banned; these include displaying a quality mark without authorisation, falsely claiming to be a signatory to a code of conduct, and falsely stating that a product will be available for a very limited time in order to obtain an immediate decision."

While consumers are aware that they have rights, Mee suggests that advertisers must note that businesses have protection too in the form of the Business Protection from Misleading Marketing Regulations 2008 (BPMR's). These prohibit misleading business-to-business marketing communications. Mee adds: "It's important to note that the BPMR's also set out the conditions under which comparative marketing communications (to consumers or businesses) are permitted, these rules are incorporated into the CAP and BCAP codes which the ASA enforces."

Responsibility for enforcement of the CRA and CPR's sits with the Competition and Markets Authority (CMA) and Trading Standards while responsibility for enforcement of BPMR's sits with Trading Standards (though the CMA has the power to enforce the BPMR's if it wishes).

The CAP and BCAP Codes cover a number of specific areas and Mee says retailers would be advised to review the relevant code (they can be easily found online) when planning any advertising. "As a general rule, adverts must be identifiable as adverts, not be misleading and not likely to cause harm or serious or widespread offence."

He explains that the two codes set out particular restrictions depending on, amongst other things, who the advert is targeting and the product that is being advertised. For example, advertising directed at children has specific restrictions attached to it, as does advertising related to gambling, alcohol, food, medical products, motoring or tobacco products. Particular rules also apply to comparative advertising.

Because the CPR's prohibit unfair, misleading and/or aggressive commercial practices, the ASA will take factors identified in CPR's into account when it considers whether a marketing message breaches the CAP or BCAP Code.

The rules make an advert misleading if it is likely to deceive consumers and likely to cause consumers to take "transactional decisions" (i.e. buy, keep, pay for something or enter into a contract) that they would not otherwise have taken. As Mee points out, an advert can mislead not just by including false information, "but also by omitting to include important information that allows the consumer to make an informed decision."

While it's less likely, there's another element of the rules that a retailer should consider - that of aggression. "Here," says Mee, "an advert will be deemed to be aggressive if it is likely to significantly impair the average consumer's freedom of choice through harassment, coercion or undue influence and, as a result, consumers are likely to take transactional decisions they would not otherwise have taken." Factors here include the timing, location, nature or persistence of the advertising and whether the advertiser is aware of any specific misfortune or circumstance of the consumer and exploits that. So, for example, preying on poorer customers by deliberately offering products on not particularly attractive payment plans might be caught here.

An advert may also be deemed to be "unfair" if it goes against the requirements of "professional diligence" - the standard of care expected towards consumers and general principle of good faith in the advertiser's field of activity - and is likely to materially distort the buying behaviour of consumers in relation to the advertised goods or services.

While most consider the rules apply to print, radio and TV, retailers must note that the ASA rules also apply to social media. Adverts and social media posts must be clearly identifiable. So just as with traditional media, the ASA will consider complaints about adverts on social media too. The same applies to promotional activities such as competitions - CAP (Section 8) and BCAP (Section 28) contain particular rules here.

Retailers who use sponsorship to promote their activities need to note that this too is regulated in the same way as any other form of advert. Mee says that rules apply to the sponsorship of broadcasts - "these are set out in section 9 of the Ofcom code and require that: (i) sponsorship arrangements are transparent; (ii) sponsorship messages are separate from programmes and advertising is distinguished from sponsorship; and (iii) the broadcaster maintains editorial control over sponsored content and that programmes are not distorted for commercial purposes."

With the principles established, the natural question is what happens if a complaint is upheld? "Quite simply", says Mee, "if the ASA finds that an advert breaches the CAP or BCAP Code, it will ask the advertiser to withdraw or change it." Interestingly, although the ASA cannot impose fines, the ASA does have other sanctions at its disposal which include publishing its decisions, asking publishers and media owners to refuse space for an advertisement until it has been changed. It can also refer the advertiser to Trading Standards or the CMA, who can seek an injunction through the courts to prevent the same or similar claims being made in future adverts.

But while some may consider the ASA toothless - it's not - Mee doesn't recommend engaging in a practice that is banned under CPR's or placing misleading advertising prohibited by BPMR as "these are criminal offences punishable by a fine, up to two years in prison or both. Consumers also have civil remedies against entities that breach CPR's, these include unwinding the relevant transaction or receiving a discount." This legal remedy could prove very expensive for a retailer.

And as Mee noted earlier, "anything you say in an advert may be taken into account and used when a consumer makes a claim under the CRA that relates to the goods, services or digital content in question. Retailers need to remember that consumers can reject goods that are defective (and receive a refund) within 30 days of delivery (or installation, if that is part of the contract). If a consumer does not reject defective goods, they may require that the goods are repaired or replaced and, if this is not possible, the consumer has the right to a reduction in price of the goods. Similar rules apply to defective digital content, except that consumers do not have the short-term right to reject defective digital content. Consumers can request that defective services are performed again and also have a right to a reduction in the price of defective services."

The lesson is, and ought to be, play by the rules. The one-off gain from breaking the rules really isn't worth the publicity.

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