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ASA Adjudication on MyCityDeal Ltd

MyCityDeal Ltd t/a Groupon

1 Liverpool Street
London
EC2M 7QD

Date:

14 December 2011

Media:

Internet (sales promotion)

Sector:

Leisure

Number of complaints:

2

Complaint Ref:

A11-154434

Ad

Two sales promotions on the Groupon website:

a. The first ad, seen on 16 March 2011, stated "Today's deal: 50 Laps of Go-Karting for £15 with Karting 2000 (Value £45) ... Discount 67%. You save £30.00".

b. The second ad, seen on 26 April 2011, stated "Exclusive Track Hire For a Day with Unlimited Laps for Up to 300 People for £1500 at Ace Karting Plus (Value £4000) Amount: £1,500.000 Discount 63% You save £2,500.00 Highlights Whole day private hire (midday - 8pm) ... Refreshments on arrival ... Lunch can be provided at an extra cost ... Fine Print Expires 29 October 2011. 1 Groupon per event, may buy multiple as gifts. Up to 6 people on the track at any given time ... ".

Issue

Daytona Manchester Ltd and Daytona Motorsport Management Ltd, who believed ads (a) and (b) exaggerated the value of the experience and therefore the savings that could be made, challenged whether they were misleading.

CAP Code (Edition 12)

Response

In relation to ad (a), Groupon explained that the package available under the offer was tailor-made for Groupon and was not usually available at Karting 2000. They said they applied a 'generally sold' principle when attaching a value to the 50 lap deal. They said they had researched the market to find a fair and legitimate price point on which to apply the discount. They provided examples of karting centres around the country which charged between £35 and £60 for 50 laps of karting. Groupon argued that, far from being an exaggeration of the discount on offer, the £45 value claim was a conservative approximation of the package's value. They said that they had also based the value claim on Karting 2000's existing rates. The most expensive rate on Karting 2000's website was a Grand Prix package, which was a tournament-style challenge for 12 or more drivers, and for £35 per driver they each had between 30 and 42 laps of karting. Groupon said that as that format required a minimum of 12 drivers in order to cover costs, because the offer did not stipulate a minimum number of drivers and because the offer was for 50 laps as opposed to 42 laps, it was logical that the value of the experience was higher than £35.

They pointed out that the promotion had been well received and they provided some evidence to support this. They also pointed out that they had received no complaints about the offer.

In relation to ad (b), Groupon explained that the exclusive hire package was available on request during the 12 months before the Groupon offer went live, although it had never been purchased by a customer. They understood that if Ace Karting Plus were approached by a customer who wanted exclusive hire of the track for the whole day, they would quote up to £4,000 depending on the number of drivers. Groupon provided an e-mail from Ace Karting Plus in which they stated that the price of a day's exclusive track hire was £4,000.

Assessment

Upheld

In relation to ad (a), the ASA understood that Karting 2000 did not normally offer a 50-lap karting experience. The most expensive rate on their website was £35 per driver for a Grand Prix package requiring a group of 12 or more drivers and that each driver had between 30 and 42 laps of karting for that price. We considered that there were significant differences between the Grand Prix package and the offer experience, since the Grand Prix package required a minimum of 12 drivers and gave each driver between 30 and 42 laps, whereas the offer experience did not stipulate a minimum number of drivers and gave the driver 50 laps.

We noted that Groupon had formulated an approximate value using Karting 2000's existing rates, and prices from other karting centres around the country which they considered offered the same or similar experience. We also noted the ad had not made clear how the £45 valuation had been calculated. We considered that most consumers would interpret "Value £45" to mean that 50 laps at Karting 2000 usually cost £45 and that this was what the saving was based on.

We noted the CAP Code stated that price comparisons with a competitor price must be with the price for an identical or substantially equivalent product and must explain significant differences between the products. We noted that Groupon's value approximation failed to take into account the location of the centres and regional price variations, the type and quality of the experiences offered, including the length and complexity of the tracks, and other external factors affecting pricing. We considered that the £45 valuation had not been based on substantially equivalent services and noted significant differences had not been explained. We further considered that Groupon should not have compared the £15 price with an amount described only as 'value'.

In relation to ad (a), we concluded that because Karting 2000 did not normally offer a 50-lap deal, because their most expensive rate was £35 for a different experience, because the value approximation had not been shown to be based on substantially equivalent services and the ad had not made clear significant differences, the claim "Value £45" had not been substantiated and the claim and the ad were misleading.

In relation to ad (b) we understood that the £4,000 price was quoted on request and that Ace Karting Plus had never sold a day's exclusive hire package. We considered that Groupon had not shown that the £4,000 price was a genuine retail price because no one had ever purchased the exclusive hire package and because we had seen no evidence that this package had ever been offered to a potential customer. We therefore concluded that the claim "Value £4,000" had not been substantiated and the claim and the ad were misleading.

The ads breached CAP Code (Edition 12) rules 3.1 (Misleading advertising), 3.7 (Substantiation), 3.17 (Prices) and 3.39 (Price comparisons).

Action

The ads must not appear again in their current form.

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