ASA Adjudication on eBay International AG

Ad

A poster, for eBay, stated "GUESS WHAT? 25% CHEAPER THAN THE HIGH STREET ON BRAND NEW ITEMS". Small print at the bottom stated "Source: Frontier Economics, Spring 2008. Figure obtained by comparing the average sold price (including P&P) of 288 new products on eBay.co.uk with the price in mainstream retail stores. In respect of each product, prices were obtained in 6 different retail stores and the average price was taken."

Issue

The complainant challenged whether the claim was likely to mislead, because it did not make sufficiently clear the basis of the comparison.

CAP Code

Response

eBay International AG (eBay) argued that the claim "25% cheaper than the high street on brand new items" was truthful and fully substantiated.  They said the claim was based on the findings of an independent report; they sent a copy of that report.

eBay said the report had focused on a range of typical household items that were sold in mainstream stores and on eBay.  They said the report looked at products in France, Germany and the UK, and the sample consisted of 288 products in the UK.  They said, in order to ensure that the prices were compared on a like-for-like basis, products sold in offline stores were manually matched as closely as possible to products sold through eBay, based on the product name, model number (where appropriate) and product description.   They said unbranded products and second hand or used items were excluded from the study due to the difficulty of making reliable comparisons between prices on eBay and in offline retailers.

eBay said, for each of the 288 products, prices from recent eBay transactions were compared with prices in mainstream retail stores, such as Debenhams and John Lewis. They said the research on prices was conducted by a global research company with expertise in retail market research.  eBay said they did not have access to the research done by that company but said the products in the sample were, on average, transacted 30 times on eBay and, for each product, the observed prices in multiple transactions on eBay were combined to compute an average price.  They asserted that, if the price associated with the lowest transaction was taken, instead of an average, the eBay price was likely to have been significantly lower and, therefore, the percentage saving was likely to have been higher than 25%. They said, when calculating the eBay price of the products, the postage and packaging costs relating to the item were added to the price; they believed that was a conservative approach, because no account was taken of any transaction costs incurred by consumers when purchasing from retail stores, such as travel to the store.  

eBay said the research adopted two methodologies to calculate the percentage price saving across the entire sample of products: a value weighted average and a volume weighted average.  They said the value weighted average provided the average price saving available to a buyer purchasing a basket of products that included all the products in the sample and calculated the average price difference for each of the product categories in the sample.  They said, using that methodology the average saving across the entire sample of products was 28%.

eBay said the volume weighted average provided an indication of the average price saving available to an eBay buyer on each transaction in the sample.  They said, on that basis, the average price saving across the entire sample of products was 25%.  They said they had included the more conservative result of 25% in their campaign.  They said they would be happy to amend future ads to make clear on what the 25% figure was based.

Assessment

Upheld

The ASA noted the claim was based on a study carried out for eBay by a third party. We considered that readers would understand the claim "25% CHEAPER THAN THE HIGH STREET ON BRAND NEW ITEMS" as an absolute claim that eBay was cheaper than all main high street stores for all new items, regardless of the product sector. We noted the comparison was based on 12 different sectors and that an average had been taken of the price difference of all products in those sectors. We noted the full evidence was not available and that eBay did not have access to it; we understood, however, that, because an average had been taken of all the stores prices, it was possible that one store could have been regularly cheaper than eBay, or regularly much closer in price to eBay. We also considered that there were product sectors not included in the comparison that consumers might expect had been included; for example, furniture, garden goods, luggage, desktop computers and toys and games had not been included in the comparison, but the ad did not make that clear. We considered that, although it might be the case that eBay was cheaper than some high street stores for some new products, the evidence was not sufficient to support such an absolute claim that eBay was cheaper than all high street stores for all new products.

We noted the small print stated "Figure obtained by comparing the average sold price (including P&P) of 288 new products on eBay.co.uk with the price in mainstream retail stores. In respect of each product, prices were obtained in 6 different retail stores and the average price was taken".  However, we considered that readers were likely to infer from the headline claim that they could expect a new item purchased on eBay to be 25% cheaper than one purchased in the high street on every occasion. Because the small print was of insufficient size to avoid being overlooked, and because it contradicted the main message of the headline, we considered that the ad was likely to mislead.   

The ad breached CAP Code clauses 3.1 (Substantiation), 7.1 (Truthfulness) and 18.1 and 18.3 (Comparisons with identified competitors and/or their products).

Action

The ad must not appear again in its current form. We told eBay to ensure they held robust evidence to support comparative claims in future.

Adjudication of the ASA Council (Non-broadcast)