ASA Adjudication on Smart Energy UK Ltd

Ad

A mailing for Smart Energy was headed "SMART energy - ADVANCED SOLAR ENERGY SYSTEMS." A further heading stated "Householders in your Postcode area" alongside a caption that stated "GET A FULL REFUND - further details overleaf - call today." A letter addressed "Dear Homeowner" followed, headed "Install a Smart Energy Solar System with central heating Optimisation and SLASH your household energy BILLS by up to 35%!" The text that followed described the way in which the technology worked. At the end of the letter, on page 2, text in a highlighted area stated "As part of our continued expansion we are now looking for suitable properties in your postcode area to help generate further awareness across the UK. If your property is eligible you will benefit from a SUBSTANTIALLY REDUCED price with the opportunity of FULL REFUND on the cost of installation. To see if your property would be selected, call now to arrange an appointment with one of our consultants - For a FREE, no obligation survey call 0800 XXXX XXX NOW or return the pre-paid envelope enclosed or go to ... (a website address followed)."

Issue

1. The recipient challenged whether the front of the mailing was misleading for not making clear that "GET A FULL REFUND ..." applied to the cost of installation only.

The ASA challenged whether the advertiser held evidence to show that:

2. customers had received full refunds and

3. savings of up to 35% off energy bills were achieved.

CAP Code (Edition 11)

Response

Smart Energy said they intended to continue to use the claims but that they were willing to make any amendments to comply with the CAP Code.

1. & 2. Smart Energy said that, despite the reference on page 2 of their ad to a refund "on the cost of installation", their offer was to refund the full contract value that a customer had paid to have their system installed, subject to them meeting the referral scheme conditions. These conditions were that, when an installation was completed, a customer was given a handbook and 12 pre-paid referral vouchers.

They said when the customer referred another potential customer on to them, who made an appointment to receive a quotation for a solar heating system, they would be paid £25 each time. If one of those referrals subsequently had a system installed, they paid the referrer an additional £225. They said that, if six referrals had systems installed, it worked out that the original customer was refunded the full cost of their contract value. They said many customers received referral fees and that, between August 2007 and June 2008, they had paid out £43,049.50 in referral fees. They supplied a list of recipients. They said one customer had successfully referred six customers and had received a full refund of his contract value in 2004.

3. Smart Energy said an installation consisted of a solar water heating system and a central heating boiler control box called the Energy Master. They supplied details of trials of their solar water heating system carried out by the Building Research Establishment (BRE) which they believed showed there was a potential saving of 15.4% against a household's previous energy bill by using their solar water heating system. They also supplied details of tests carried out to Ofgem-approved methods by Total Energy Controls Ltd, the manufacturer of the Energy Master, which they believed showed there was a potential saving of 19.65% against a household's previous energy bill by using the Energy Master. They believed that using their solar water heating system and the Energy Master together would mean a potential saving of 35.05%.

Assessment

1. Upheld

The ASA noted that the second reference to the refund, which appeared on page 2 of the ad, referred to a refund "on the cost of installation." We also noted Smart Energy's explanation that, despite the wording, they refunded the full contract value a customer had paid to have their system installed, subject to them meeting the referral scheme conditions. We noted that the reference to the refund offer on page 1 of the ad included the statement "further details overleaf" and that the reference on page 2 referred to "the opportunity of full refund." We nevertheless considered the ad as it was currently worded did not contain sufficient information on page 1 or page 2, either separately or together, about the restrictive nature of the refund offer.

We welcomed Smart Energy's willingness to amend the ad so that it did not include references to both a full refund and a refund of the cost of installation, but considered the ad in its existing form was ambiguous as to whether the refund offer related to the cost of installation only or the full contract value, and that therefore it could mislead.

On this point, the ad breached CAP Code clause 7.1 (Truthfulness).

2. Upheld

We noted 371 customers had received the £25 refund for referring one enquirer; a further 159 customers had received larger amounts, depending on how many enquirers they had referred and on how many of those had subsequently become customers, and that one customer had received a full refund. While it was possible to receive a full refund, and while Smart Energy had shown that had been the case for one customer, we nevertheless concluded that because, in practice, the likelihood that customers would receive a full refund was so small because of the number of enquirer-customers a customer needed to refer, the ad could mislead.

On this point the ad breached CAP Code clauses 3.1 (Substantiation) and 7.1 (Truthfulness).

3. Upheld

We noted Smart Energy had supplied details of trials of their solar water heating system carried out by BRE and that they believed the trials showed a potential saving of 15.4% against a household's previous energy bill by using Smart Energy's system. We also noted, however, that the trials were carried out on a limited range of properties (four-bedroomed, detached houses only) and that they appeared to have based the comparison of running costs before and after Smart Energy's installation on one type of fuel only (natural gas). While not wanting to doubt the findings of the individual BRE trials, we did not consider Smart Energy had shown that similar savings would necessarily be achieved in other types of property or whether the savings depended on the kind of fuel that was used to run the client's central heating. Furthermore, we noted that Smart Energy had added together the savings they believed had been proven by use of their solar water heating system to savings claims assessed in a separate trial by the manufacturer of Energy Master, the central heating boiler control box. Although we noted Smart Energy said the Energy Master trials were carried out to Ofgem-approved methods and did not want to doubt the validity of the individual tests in the settings in which they were carried out, we noted that the trials were carried out in a limited number of properties, not all of which were normal, domestic situations. We noted that, although the savings claim of "up to 35% off energy bills" related to the use of Smart Energy's solar water heating system in conjunction with the Energy Master central heating control box, Smart Energy had not supplied details of trials carried out using both systems together in the same property. Because the tests had been carried out on a limited range of properties, not all of which had been normal, domestic ones, and the mailing was addressed "Dear Homeowner," we considered Smart Energy had not substantiated the claim that savings of "up to 35% off energy bills" were achieved.

On point 3., the ad breached CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 19.1 (Other comparisons).

Action

The ad must not appear again in its current form. We welcomed Smart Energy's willingness to amend the ad so that it did not include references to both a full refund and a refund of the cost of installation. We told Smart Energy to amend their ad to remove the impression that a full refund was straightforward and simple; to replace the claim on the front page with "you could get a full refund if you successfully recommend six customers" or similar and to remove the claim that savings claims of up to 35% off energy bills were achieved.

Adjudication of the ASA Council (Non-broadcast)