ASA Adjudication on Caxton FX Ltd

Ad

A national press ad, for the Caxton FX Euro Card, showed a photograph of the card and stated "The cheapest way to buy travel money! The Caxton FX Euro Card is a prepaid MasterCard which works just like your debit card. All you do is load money onto the card online or by phone. Then use it in shops, restaurants and ATMs all over Europe. You get the best exchange rate and, whether on business or holiday, you will save money using the Euro Card. No commission Cheaper than any bank or bureaux de change Use it like any debit card - but without the charges Easy to top up from anywhere in the world No hidden fees or charges Reduces the risk of carrying cash Apply now at www.caxtonfxcard.com ...".

Issue

The complainant, who argued that Caxton FX charged £2 for cash withdrawals and did not offer the best exchange rate, challenged the claims:

1.  "The cheapest way to buy travel money!";

2.  "You get the best exchange rate"; and

3.  "No hidden fees or charges".

4.  The ASA challenged whether the Euro Cards minimum load was a significant condition that should have been stated in the ad.

CAP Code (Edition 11)

Response

Caxton FX explained the difference between using the Euro Card and a credit or debit card abroad: Euro Card customers used their UK credit or debit card to buy Euro currency and stored those funds on the Euro Card at that day's exchange rate, which was published daily on Caxton FX's website.  Once loaded, the card was used at point of sale or at cash machines, which depleted its balance.  Caxton FX said cardholders knew at what rate of exchange they had bought all their funds.  By contrast, they said, if travellers used a credit or debit card abroad, they did not 'buy' travel money; the purchase value was converted into sterling at Mastercard or Visa's own exchange rate, which was not published by either of the card brands and was visible only when a transaction had taken place.  They also argued that, if travellers used their credit or debit card at a cash machine, they would not know the exchange rate the bank was offering.

Caxton FX said the Euro Card was a transparent way to buy travel money and offered better rates than banks and bureaux de change.  They explained that all the comparative costs and exchange rates were clearly set out on their website.

1 & 2. Caxton FX said they undertook comprehensive market research and competitive analysis online and via telephone polls on a daily basis to ensure that their claims to offer the cheapest way to buy travel money and the best exchange rate were true.  They said they researched rates with the main high street banks and bureaux de change for cash exchanges of £500 including commissions and handling fees.  They enclosed copies of surveys they had undertaken on two recent dates and said a simplified set of their findings was published daily on their website.  They said any complaint that they were publishing incorrect rates offered by other institutions would be taken seriously and the rate would be amended if necessary but they had received no such complaints, despite the card having been marketed since July 2007 and having received national press coverage.

3. Caxton FX said the complainant had mistakenly referred to a £2 fee for cash withdrawals; the actual fee was €2.  They pointed out that the ad referred readers to their website, which contained a section entitled 'What it costs', which highlighted the costs associated with using the Euro Card, including the €2 fee for cash withdrawals.  They said every application for a Euro Card had to be made via their website and the limited costs involved in card ownership were made clear on the website before customers chose to apply.  They said the website also compared the costs involved in using the Euro Card with the cost of using a debit card abroad and gave customers tips on how to save money when using their product; for example, it advised customers to use the card for purchases in shops and restaurants instead of for taking cash from an ATM, because the former incurred no charge.

Caxton FX argued that the claim "No hidden fees or charges" was intended to highlight that customers using the Euro Card would not be faced with unexpected costs after they had acquired a card, because they were not subject to the monthly fees, inactivity fees, charges on purchases and commission and foreign exchange fees on transactions which were imposed by other companies in the prepaid card sector.

4.  Caxton FX said the minimum possible amount to load onto the Euro Card was initially €750 and reloads were subject to a minimum value of €150.  They pointed out that the minimum load was made clear on their website, both on the application page and in the How it works section.  They believed some of their competitors also had minimum load values but did not declare them in their ads.

Caxton FX said they based their exchange rate comparisons on £500, despite the fact that the minimum load value was initially €750, because currencies fluctuated daily and they felt £500 was a standard benchmark that allowed them to maintain a clear view of the market.

Assessment

1 & 2. Upheld

The ASA considered that, because consumers who used their credit or debit cards abroad did not effectively 'buy' travel money, the claim "The cheapest way to buy travel money" was likely to be seen as suggesting that Caxton FX were offering a better exchange rate than banks and companies that sold travel money.  We noted Caxton FX carried out daily analysis and research into exchange rates.  However, they had sent us comparative evidence relating to only ten competitors.  We also noted their comparative evidence on exchange rates related only to the amount of £500; we considered it was possible that some of their competitors offered better rates for larger sums of money.  We also noted Caxton FX had based their exchange rate comparisons on £500 but the initial minimum load on the Euro Card was €750, a greater amount using their current exchange rate.  We considered that Caxton FX should not have based their exchange rate comparisons on an amount which was initially impossible to load onto the Euro Card.  We concluded that Caxton FX had not proved that they offered the cheapest way to buy travel money and a better exchange rate than all their competitors for any amount as the ad implied.

On points 1 & 2, the ad breached CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 19.1 (Other comparisons).

3. Upheld

We noted Caxton FX's website stated that there was a €2 fee for cash withdrawals, a £1.50 fee for loading money onto the Euro Card on the phone with a debit card and a 3% charge for loading money onto the Euro Card with a credit card.  We also noted the ad referred to using the Euro Card at ATMs all over Europe and contained the claim "No hidden fees or charges".  We understood Caxton FX believed the claim "No hidden fees or charges" was accurate, because their website made clear the costs associated with using the card instead of 'hiding' those costs from customers.  However, because the ad stated "No hidden fees or charges" and did not refer to any costs incurred when the card was used, we considered that readers were likely to infer that there were no costs associated with using the Euro Card at all.  Because that was not always the case, we concluded that the claim was likely to mislead.

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

4. Upheld

We noted that the initial minimum load on the Euro Card was €750.  We considered that €750 was a substantial amount and also understood that the high street banks and bureaux de change Caxton FX compared their exchange rate with did not require a minimum amount of money to be converted.  We therefore considered that the Euro Card's minimum load of €750 was a significant condition that ought to be stated in the ad.

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

Action

We told Caxton FX to remove the claims "The cheapest way to buy travel money" and "You get the best exchange rate", to either remove the claim "No hidden fees or charges" or to make clear the costs associated with using the card, and to make clear the minimum load of €750 in future ads for the Euro Card.

Adjudication of the ASA Council (Non-broadcast)