ASA Adjudication on Direct Marketing UK Ltd

Ad

A magazine ad, for Direct Marketing UK, stated "HOME WORKERS URGENTLY REQUIRED No Experience Necessary Computer Not Required Direct marketing company requires self motivated home workers to do envelope work. Earn £1.60p per envelope Example of Earnings Do 50 envelopes get paid £80? Do 100 envelopes get paid £160? Do 250 envelopes get paid £400? The more envelope work you do the more cash you earn We Give You Full On Going [sic] Advice and Support For your free information pack please call Liam on 0906 XXX XXXX Or text info followed by your full name and address only to 07XXX XXXXXX Or e-mail your name and address to info@XXXXXXXXXXXXXXXXX.net Or send a S.A.E. to direct marketing UK, PO Box 174, Merseyside L34 5WS ... Join or apply now at www.directmarketinguk.net". Small print at the bottom of the ad stated "All calls cost £1.50p per minute at all times from a BT land line one off joining fee applies". The follow-up literature stated "Earn up to £500+ per week ... We pay an amazing £1.60 for each envelope that you mail! You earn £5.00 commission on each order generated by your mailings! ... Does the idea of becoming an independent home mailer, mailing envelopes appeal to you? ... This is your chance to double or quadruple your current income in a matter of days ... By following our instructions contained within the home business mailwealth program, all of the envelopes will arrive pre-addressed or typed on ... That means you will NOT have to address any envelopes what so ever. Just simply secure the envelopes as per our instructions and post them to us for payment ... As soon as we receive your shipment of envelopes, we will rush you, your paycheque! ... We just need the help of honest hard working home mailers to place direct marketing information into envelopes for us on a continuous basis. We can assure you that the more envelopes you mail into us as per our instructions, The more money you will make lets [sic] say for example you only mailed us 180 envelopes a week you would get paid £288 ... but if you mailed into us 350 envelopes You would get paid £560 per week direct to you ... Please note that this is not A GET-RICH SCHEME or a mere envelope filling exercise ... HOW TO GET STARTED IMMEDIATELY! Please complete your priority APPLICATION FORM enclosed and send it back to us within 7 working days. We will require a small one off fully refundable registration fee of only £49.99. This will help to cover the cost of the administrative cost involved in post and packaging your start-up-pack to you. And all the materials you will ever need to get started and to providing YOU with ongoing support and advice and setting up your file ...".

Issue

Two complainants, one of whom said he expected the work to involve envelope filling but found that it consisted of placing ads that asked consumers to send a S.A.E. for a free information pack on envelope work, thought the ad and follow-up literature:

1. did not make clear the nature of the work, and

2. did not make clear that the rate of £1.60 per envelope was reduced if responses returned were more than seven days old and that a minimum of 20 responses had to be returned to achieve any payment.

The ASA challenged whether:

3. the quoted earnings were realistic and whether the ad and follow-up literature misleadingly implied that earnings were dependent on the respondent's ability to work, and

4. the follow-up literature made clear the marketer's geographical address, since the ad did not.

CAP Code (Edition 11)

Response

1. Direct Marketing UK (DM) pointed out that the follow-up literature, which respondents to the ad received, stated " ... Please note that this is not A GET-RICH SCHEME or a mere envelope filling exercise ...".  They said the ad was designed to find people who were interested in their scheme but their main advertising message was contained in the follow-up literature.  They said their main business was selling names and addresses to other companies for marketing purposes.  They asserted that they did not operate a pyramid scheme.

2. The follow-up literature asked recipients for a £49.99 fee to receive a start-up pack.  DM said the start-up pack made clear the restrictions on the payment rate of £1.60 per envelope.

3. DM said they paid scheme participants by postal order and had not kept any records of payment.

4. DM said their geographical address was in the start-up pack.

Assessment

1. Upheld

The ASA noted the ad claimed "Direct marketing company requires self motivated home workers to do envelope work" and the follow-up literature stated " ... Does the idea of becoming an independent home mailer, mailing envelopes appeal to you? ... Just simply secure the envelopes as per our instructions and post them to us for payment ... As soon as we receive your shipment of envelopes, we will rush you your paycheque! ... We just need the help of honest hard working home mailers to place direct marketing information into envelopes for us on a continuous basis ..."; we considered both the ad and the follow-up literature suggested that DM were offering payment for stuffing envelopes.

We considered that consumers responding to the ad and follow-up literature would not expect to have to place ads themselves.  However, one of the complainants sent us a copy of the start-up pack.  It contained a Home Business Mailwealth Program Manual, which asked recipients to place ads in shop windows or newspapers stating, for example, Marketing company requires workers to earn extra cash doing home-based work, and asking consumers to send a stamped addressed envelope to the home workers address for free details.  If the home worker received any replies, he or she was required to forward them to DM.  We considered that consumers were paying £49.99 for the opportunity to receive compensation that was derived primarily from the introduction of other consumers into the scheme.  We therefore considered that DM were operating a pyramid scheme.

We concluded that neither the ad nor the follow-up literature made clear the nature of the work and were therefore misleading.

On this point, the ad and follow-up literature breached CAP Code clauses 7.1 (Truthfulness) and 52.4b (Employment and business opportunities).

2. Upheld

We noted DM had previously been told by the CAP Copy Advice team that it was likely to be acceptable to quote £1.60 per envelope" providing that was the fee paid to everyone.  We also noted the Copy Advice team were not aware of the true nature of the work involved when they gave their advice.  We noted the start-up pack stated " ... We will pay a reduced rate of £1.00 for each envelope that are [sic] Older than 7 days old from when we receive them ..." and " ... We will only be able to issue a cheque for a minimum of 20 envelopes.  You may make this total up in separate batches, to ensure that each envelope is less than 7 days old when we receive it ...".  However, we noted the ad stated "Earn £1.60p per envelope" and the follow-up literature stated "We pay an amazing £1.60 for each envelope that you mail!"; we considered they both misleadingly suggested that £1.60 per envelope was the fee paid to everyone.  We considered the restrictions on the payment rate were significant and ought to have been made clear to consumers in the ad or follow-up literature, before they had made a financial commitment to the scheme.

On this point, the ad and follow-up literature breached CAP Code clauses 7.1 (Truthfulness) and 52.4i (Employment and business opportunities).

3. Upheld

We noted the Copy Advice team had told DM that the claim "Do 250 envelopes and you will be paid £400+" should be removed if most people on the scheme did not achieve that level of payment.  We noted the follow-up literature stated "Earn up to £500+ per week ..." and " ... if you mailed into us 350 envelopes You would get paid £560 per week ...".  We noted DM had sent no evidence that the quoted earnings had ever been achieved.  Given that rates were reduced for replies that were older than a week, the numbers of envelopes quoted in the ad would have to be less than a week old on receipt by DM to achieve the corresponding quoted payment rates; we considered that would be difficult to achieve.  We considered DM had not proved that the quoted earnings were realistic.

We also noted the ad stated "The more envelope work you do the more cash you earn" and the follow-up literature stated " ... the more envelopes you mail into us ... The more money you will make ..." which we considered implied home workers could earn as much money as they wanted depending on their eagerness to work, whereas we understood that the amount earned depended on how many people replied to the notices placed.  We concluded that the ad and follow-up literature were misleading.

On this point, the ad and follow-up literature breached CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 52.2 (Employment and business opportunities).

4. Upheld

We noted neither the ad nor the follow-up literature made clear DMs geographical address, despite the fact that the Copy Advice team had advised DM to include a full geographical address instead of a PO Box address in the follow-up literature.  We also noted the geographical address was not in the start-up pack despite DMs assertion that it was.

On this point, the ad and follow-up literature breached CAP Code clauses 7.1 (Truthfulness) and 52.4a (Employment and business opportunities).

Action

The ad must not appear again in its current form.

Important note: A new Code clause was introduced to reflect the Consumer Protection from Unfair Trading Regulations 2008 and applied to marketing communications that appeared after 24 June 2008.  Although the ad appeared before that date, we noted the new Code clause stated "marketing communications should not offer schemes under which consumers pay or give consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme and not from the sale or consumption of products (pyramid schemes)".  Because DM were operating a pyramid scheme, we told them not to advertise it at all.

Adjudication of the ASA Council (Non-broadcast)