ASA Adjudication on Carphone Warehouse Ltd
Carphone Warehouse Ltd
1 Portal Way
19 July 2006
Television, Leaflet, National press
Computers and telecommunications
Number of complaints:
Clemmow Hornby Inge
Advertising in a range of media promoted a new TalkTalk telephone package with "free broadband forever". Media included a TV ad, a press ad and a CD promotion.
The TV ad claimed "Join TalkTalk, the home phone company, and get broadband free forever." Onscreen text stated "Connection fee and contract apply. Subject to availability. Terms and Conditions at talktalk.co.uk".
The press ad claimed "Free broadband forever". Smaller text at the bottom of the ad stated "... Connection fee and contract apply. Subject to availability. Terms and Conditions at talktalk.co.uk".
The CD promotion was headlined "Everything you need to get FREE broadband forever". It further claimed "Free broadband forever - up to 8 Meg(3)". The 3 linked to smaller text on the back of the promotion which stated "At connection time we will give you the highest available speed. Subject to availability. 8Meg refers to your download speed Terms and conditions apply ...".
145 people, including competitors British Telecom, Tiscali and ntl:Telewest, complained about the advertising. They said it was:
1. misleading to suggest that the broadband was free when it involved an 18-month contractual commitment to the Talk3 International (T3I) calls package; a connection charge of £29.99; ongoing costs of £9.99 per month plus line rental (£20.99 in total) and a disconnection fee of £70;
2. also misleading to claim broadband was "free forever" and
3. not sufficiently clear from the advertising that the availability of broadband was dependent on being connected to a qualifying telephone exchange and that people not connected to such an exchange would have to pay a further £10 per month for the broadband service.
4. The ASA also challenged whether it should have been made clear in the ads that a delay of around 10 weeks would apply before people would receive broadband.
1. TalkTalk said T3I was a brand new, competitively priced calls package offering an unlimited number of anytime calls in the UK and to 28 countries worldwide. They said broadband was not part of this package but was an added optional service also available to buy separately at a cost of £35 a month. They said broadband was provided at no extra cost to all subscribers of the T3I calls package and could therefore be considered similar to many other "buy one get one free" offers or, for example, free insurance offered on a new car. They had also relied on the CAP (Non-broadcast) Help Note on "Free" Claims for Internet Packages currently displayed on the CAP Website which stated "marketers may claim their services are "free" where consumers pay nothing for each element of the service but are required to pay for another separate item. An example would be offering a completely free Internet service but requiring customers to make a certain amount of non-internet related calls each month or subscribe to a cable television service". They said the connection fee also applied to people who just took out the T3I calls package and was associated with the calls package rather than broadband. They said they had received no complaints directly from consumers and that over 340,000 customers had opted to take broadband from them when signing up to T3I with over 10,000 customers opting to take T3I without broadband. They said they recognised the principle of the CAP (Non-broadcast) Help Note on "Free" Claims that attributing an optional extra to a new service and calling it "free" was not permitted because it could be used as a way for advertisers to inflate the price of a service to cover the extra "free" element. They assured the ASA that this was not the case for TalkTalk's T3I calls package.
The Broadcast Advertising Clearance Centre (BACC) said they had considered very carefully whether to allow TalkTalk to refer to their broadband as "free" in the TV ad. They said they understood that the T3I calls package had been available beforehand without the broadband element. They decided that, because they understood it was an existing package and because the T3I calls package was available without taking broadband and because the connection charge and monthly cost would be the same for people who chose not to take the broadband option, the broadband was additional to the calls package and therefore could be considered free.
2. TalkTalk said the broadband was free and would be free forever as they had no plans to charge for it. They said it was not an introductory offer and the claim "free forever" made this clear to consumers. They said the use of "forever" was driven by their initial market research where customers said they would view the offer as "too good to be true" such that customers would expect a time limit to apply if "forever" was not used.
The BACC said they were already of the opinion that TalkTalk broadband could only be "free" for a reasonable period of time, after which consumers would expect to receive it for that cost and it would therefore become an "inclusive" part of any charge made to receive it. However, they said it would be unduly literal to forbid the use of "forever" during the period in which they had thought it was permissible to refer to the broadband as "free". They said for the customers who signed up whilst it was "free" it would be "free forever" as they would always receive it at no extra cost. They said this differentiated it from a promotional offer in which, for example, it would be "free for six months" after which a charge would apply.
3. TalkTalk said all their advertising made clear that the service was subject to availability, which was industry practice. They said in view of the complaints they intended to include a sticker on their in-store posters to reinforce this message and to ask people to check availability on the TalkTalk website. They said they had certainly not intended to mislead people about whether they would have to pay £10 per month and the charge was only applied to those BT exchanges that TalkTalk was not going to unbundle. They said customers could not proceed with an order without first being informed about whether the £10 per month charge would apply to them. They said they planned to "unbundle" 1000 exchanges. This meant they would install their own equipment in those BT exchanges, which would give them access to 70% of the population and enable them to provide those people with broadband at no extra cost.
The BACC said the TV ad included the onscreen text "Subject to availability" which made clear to all viewers that they may not be able to receive the service.
4. TalkTalk said demand for the service was much higher than anticipated and they were working as hard as they could to enable the broadband as soon as possible for all people who had signed up. They said the likely timescale for enabling broadband was made clear through their website, which people had to use to check availability before signing up. They said their staff used the same system in shops and over the telephone and therefore all customers would know how long the delay was likely to be before signing up.
The BACC said they did not think people would be put off signing up to the T3I package just because the broadband would take 10 weeks to set up.
1. Complaints upheld
The ASA noted that the T3I calls package cost only £1 per month more than the next-highest-priced "T3" calls package and included some international calls. We also accepted that customers had a choice as to whether to take broadband and that broadband was available separately, albeit for £35 a month. We also noted that TalkTalk had relied in good faith on the CAP (Non-broadcast) Help Note on "Free" Claims for Internet Packages in order to claim the broadband element was "free". However, we understood that CAP intended this help note to relate only to existing packages. We did not therefore consider it applied because T3I was a brand new package. Also, CAP (Broadcast) Help Note on "Free" claims stated "... if an extra element is added ... to form a more attractive product, the element could be described as "free" for a reasonable period as long as the original package (without the extra element) had been available beforehand at the same price, again for a reasonable period."
We considered that, because T3I was a brand new package, and the intention was that the broadband element would always be an optional extra to that package, the broadband was, to all intents and purposes, a constituent part of the new T3I package; it was only available as an option to people who paid a connection charge to sign up and who continued to pay a monthly charge. We considered this made broadband an intrinsic part of the new T3I calls package which made it different to "free insurance" or "buy one get one free offers". Although we acknowledged that the price difference of T3I had not been inflated beyond that of equivalent competitor's call packages we still considered that the broadband element should not have been described as "free".
We told TalkTalk to seek CAP Copy Advice before using "free" in future non-broadcast advertising and that the claim be removed.
On this point, the TV ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1 (Misleading advertising), 5.2.1 (Evidence) and 5.2.4 (Use of free).
On this point the CD promotion and press ad breached CAP Code Clauses 3.1 (Substantiation) and 7.1 (Truthfulness).
2. Complaints upheld
We noted that the offer was not introductory. However, as we did not consider the broadband could be described as free (as outlined in point 1 above) we considered the claim "free forever" to be misleading. Furthermore, even if the broadband could be described as "free" we did not consider it was possible for TalkTalk to substantiate the claim "free forever". Inevitably, for those people who had signed up to the offer when it was advertised as "free", the broadband would become "inclusive" after a reasonable period of time because they would continue to pay £20.99 a month. The benefit of "free" broadband would therefore stop once it became inclusive because customer's future payments would be for an "inclusive" rather than "free" aspect of what they were paying for.
On this point, the TV ad breached CAP (Broadcast) TV Advertising Standards Code rule 5.1 (Misleading advertising).
On this point the CD promotion and press ad breached CAP Code Clause 7.1 (Truthfulness).
3. Complaints upheld
We considered that "Subject to availability" was not sufficiently clear to highlight to consumers that the TalkTalk broadband service was only available without an extra charge to homes that were connected to an exchange which TalkTalk had (or proposed to) "unbundle". We considered that "Subject to availability" was ambiguous and could have been interpreted by consumers to mean that availability was limited, or that it was dependent on technical issues outside of TalkTalk's control. Furthermore the CD Promotion only referred to the availability of the 8 Meg download speed, not the broadband service in general. We welcomed the proposed changes TalkTalk planned to make and we told them to seek CAP Copy Advice on how best to explain the availability of their service in their non-broadcast advertising.
On this point, the TV ad breached CAP (Broadcast) TV Advertising Standards Code rules 5.1 (Misleading advertising) and 5.2.3 (Qualifications).
On this point the CD promotion and press ad breached CAP Code Clause 7.1 (Truthfulness) and 30.2 (Availability).
4. Not upheld
We accepted that the delays were partly caused by exceptional demand for the service. We considered it would have been extremely difficult to accurately measure the likely response to the offer. We noted that most broadband services took some time to set up and people would therefore expect a delay of some kind, although not usually as long as 10 weeks. Given the difficulties in anticipating demand, we accepted, in this instance, that it would have been difficult for TalkTalk to accurately reflect in their advertising when first broadcast/published that there would be a considerable delay in the broadband service for some customers. However, we advised TalkTalk that, should the delays persist, we would expect them to reflect this in any future advertising so that potential customers are aware from the advertising itself of the problems rather than having to rely on information from TalkTalks' website or their staff.
On this point we investigated the TV ad under CAP (Broadcast) TV Advertising Standards Code rule 5.1 (Misleading advertising) and 5.2.3 (Qualifications) but did not find it in breach.
On this point we investigated the CD promotion and press ad under CAP Code Clause 30.1 (Availability) but did not find them in breach.
The ads must not be broadcast or published again in their current form. We told TalkTalk to seek CAP Copy Advice on how best to explain the availability of their service and before using "free" in their non-broadcast advertising.
Adjudication of the ASA Council (Non-broadcast)