Is Your Advertising Breaching the Codes?

Tuesday, December 18th, 2012

Have you been misled by Groupon? If your answer is yes, then you are not alone. Many have and have complained about just this to the Advertising Standards Authority (‘ASA’).
The ASA is an independent body which regulates, investigates and adjudicates on advertising across all media. The UK advertising codes lay down rules for advertisers, agencies and media owners to follow. The ASA has a wide remit in enforcing compliance in both Broadcast (BCAP Code) and Non-Broadcast (CAP Code) advertising and require that all advertisements, wherever they appear, are prepared in a responsible way and do not contain anything likely to be misleading, harmful or offensive (the ‘Codes’). The Codes are written by the Committee and are administered by the ASA. The Codes deal with rules relating to, but not limited to: Misleading Advertising, Sales Promotions, Alcohol, Children, Sales, Political Advertisements and much more. The majority of ASA work deals with Magazine, Radio/TV, TV shopping Channel adverts and online adverts. Recently, the ASA remit has been extended to include all online advertising (whether paid for or not and including social media websites) which has significantly increased the work of the ASA.
The ASA have dealt with a significant amount of complaints regarding the daily online deals company (and website), Groupon (www.groupon.co.uk) and has upheld 19 out of 20 complaints following investigation. As a result, Groupon had to amend or withdraw the advertisements complained off. Groupon also resolved 9 complaints against it informally without investigation. The common theme again and again was the misleading nature of the advertising. The ASA referred Groupon to the OFT to investigate Groupon’s activities further. The three main reasons the ASA referred Groupon to the OFT were primarily in relation to Groupon’s:
(1) failure to conduct promotions fairly (a lack of clear terms and conditions);
(2) exaggerated savings claims; and,
(3) failure to provide evidence that offers were in fact available.
With Groupon’s co-operation, the OFT investigated Groupon’s advertising activities under the Enterprise Act 2002. The OFT expressed concerns around Groupon’s trading practices, with particular emphasis on the following:
(1) prices;
(2) time limited offers;
(3) products and services not as advertised;
(4) undelivered products;
(5) insufficient supply to meet demand;
(6) failure to give consumers refunds when due; and,
(7) unfair terms.
The OFT looked at the complaints in light of the relevant law namely, the Enterprise Act, the Consumer Protection against Unfair Trading Regulations and the Unfair Terms in Consumer Contracts Regulations. The outcome of the investigation was that Groupon gave a signed undertaking to the OFT that they would comply with the law for nine (9) months (the ‘Undertaking’). This Undertaking took effect in June 2012. The OFT have said that if any complaints happen within this period, they may apply to Court for enforcement to ensure Groupon’s compliance with all consumer legislation.
As well as continual monitoring and the initial investigation into Groupon, the OFT have written to thirty-five (35) daily deal companies to tell them that the Groupon Undertaking has now set a clear standard for the sector as a whole. There is a clear message that, if necessary, the OFT will take targeted national enforcement action against businesses or organisations using practices that constitute serious breaches of the Codes and the law.
In conclusion, the OFT and the ASA have taken the persistent breaches by Groupon very seriously. This is a warning to the whole sector that Advertisers must comply with the Codes. The protection of the consumer is at the forefront of Government policy which is enshrined in statute as well as non-statutory Codes and is fiercely guarded by the watchdog role of the ASA, OFT and other associated bodies.
If you are unsure about whether or not your advertising practices might fall foul of any of the rules enshrined in the advertising Codes, don’t hesitate to get in touch with us. We can help you make assessments about your off and online advertising literature and materials to help you stay on the right side of the law and the ASA. Call us on 0207 228 0017 or email us at info@hanne.co.uk