ASA Adjudication on Craftmatic UK Ltd

Ad

A national press ad, for Craftmatic UK, was headed "SALES/ONE IN A MILLION/RISE TO: £300-£500/k Overachievers Distributorship Perks*". The asterisk was linked to text that stated "*US Distributor earned over $1m/year". Below the headline, text stated "Commissions Start To: £3900/wk. High Ticket Items: As High as: 21% Commission £3000/£6000 Per Sale. 60 Million UK Residents Use One. 96,153 UK Consumers a wk Buy One. 13,763 Are Sold Every Day. 30 Million Actual Customer Enquiries. We offer the most Positions/Searching for High Earners To Cover an Overabundance of Top Quality Leads/2-3 Pre-Set daily. Car a Must/Not Multi-Level. 0800 XXXX". The ad included the Direct Selling Association logo.

Issue

A reader believed the ad was misleading because:

1. he understood the claimed earnings of £300,000-500,000 and weekly commission of £3900 were unlikely to be achievable;

2. he believed the claims, "60 Million UK Residents Use One", "96,153 UK Consumers a wk Buy One" and "13,763 Are Sold Every Day", implied a reference to the number of Craftmatic adjustable beds sold;

3. he doubted whether the claim of 30 million actual customer enquiries could be substantiated; and

4. it did not make clear that sales representatives were required to pay a deposit for equipment before they could start working for the company.

CAP Code (Edition 11)

Response

Craftmatic said it had not been their intention to mislead readers.

1. Craftmatic explained that they engaged independent sales representatives as agents in the UK. They believed the claim "Commissions Start To: ..." made clear that earnings were commission based and referred to a maximum earnings figure. They said they chose the wording in order to avoid giving the impression that the quoted £3900 per week was an average figure. They supplied evidence they believed showed a number of Craftmatic sales representatives who earned £3900 or more in a single week.

Craftmatic explained that they were a company associated with Craftmatic Organization Inc, and were its distributor. They said Craftmatic Organization Inc also appointed distributors who were responsible for particular geographic areas. They said a number of sales representatives had progressed to become distributors, including two UK sales representatives. They said the claim £300-£500/k Overachievers Distributorship Perks" was linked by an asterisk to a footnote that explained a US distributor earned over $1 million a year. They believed the "to" in the claim made clear that this was not a general or average earning for distributors. They said the quoted figure was based on figures for 2002.

2. Craftmatic believed it was clear that the claim "60 Million UK Residents Use One" was referring to the population of the UK and simply reflected the fact that every UK resident slept in a bed. They believed no reasonable person seeing the ad would conclude that Craftmatic supplied every single bed used by a UK resident. They believed the claims "96,153 UK Consumers a wk Buy One" and "13,763 Are Sold Every Day" had not suggested that the figures related to Craftmatic beds but would be understood to refer to the number of beds sold each week and each day in the UK. They said the claims were based on market research.

3. Craftmatic said they believed the figure of 30 million customer enquiries was substantially lower than the true figure. To support their claim they provided a report of actual UK enquiries from 2001 to 2007, and an estimate, based on the ratio of 35 enquiries per unit sold, which covered the period 1994 to 2001. They also provided actual enquiry figures for the US between 2006 and 2007 and similar estimated figures from 1993 to 2005. They said because US enquiry figures from 1974 to 1992 no longer existed they had estimated the figure based on their previous experience and knowledge.

4. Craftmatic said sales representatives were not required to pay a deposit for equipment before they could start working for the company. They said representatives were required to sign an agreement to return sales material when their engagement was terminated and, if they failed to do so, they would be charged for the materials.

Assessment

1. Upheld

The ASA considered that it was unclear from the ad what type of job was being offered, but understood that it was for the recruitment of sales representatives in the UK. However, we noted the headline claim "SALES/ONE IN A MILLION/RISE TO: £300-£500/k Overachievers Distributorship Perks" referred to the earnings of distributors, and not sales representatives, which was the job being advertised. We also noted the figure was based on the 2002 income of a US distribution company rather than more recent earnings of a UK distributor. We acknowledged that it was possible for a sales representative to eventually become a distributor but noted only two UK representatives had progressed to that position. Because it was not the job that applicants would be applying for, and because the figures were based on US earnings, we considered the inclusion of the figures gave a misleading impression of likely earnings.

We also considered that the ad did not make clear enough that earnings were commission-based only. We considered that including both claims, "SALES/ONE IN A MILLION/RISE TO: £300-£500/k" and "Commissions Start To: £3900/wk", without clear explanation, gave the impression that there was both an annual wage and commission available on top. We concluded that the ad was misleading because it was unclear from the claims what type of job was being offered and exaggerated the likely earnings.

On this point, the ad breached CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness), 52.1 (Employment and business opportunities) and 52.2 (Employment conditions).

2. Upheld

We considered that, because the ad did not mention either the type of product being sold or Craftmatics name, readers would be unaware that the claims referred to beds and were therefore likely to believe the claims referred directly to the product they would be selling. We considered that, because it was unclear that the claims referred to general bed sales, the claims gave a misleadingly impression of potential sales opportunities.

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

3. Upheld

We noted the evidence provided by Craftmatic consisted of actual recorded figures and estimated numbers, either because statistics no longer existed or had not been recorded in the first place. However, because the ad made an absolute claim of 30 million "actual" customer enquiries, we considered that the estimated figures were insufficient evidence to substantiate the claim.

We also considered that, because the ad was for a job selling in the UK, readers were likely to believe the claim referred to the UK market; we noted, however, that it was based on figures from both the US and the UK. We noted the figure for the UK, even including the estimated enquiries, was substantially lower than the quoted 30 million. We considered that the ad gave a misleading impression of the amount of customer enquiries Craftmatic received.

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

4. Not upheld

We noted Craftmatic's written assurance that sales representatives were not required to pay a deposit for equipment before they started work for Craftmatic. In the absence of evidence to the contrary, we concluded that, on this point, the ad had not misled.

On this point, we investigated the ad under CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness), and 52.2 (Employment conditions).

Action

We told Craftmatic not to use the claims or the same approach in future ads.

Adjudication of the ASA Council (Non-broadcast)