ASA Adjudication on Telecom Plus plc
Telecom Plus plc t/a
The Utility Warehouse
333 Edgware Road
30 May 2012
Number of complaints:
A circular, for a utilities service, included a letter and a leaflet. Both parts included claims that consumers could benefit from "The UK's cheapest Home Phone The UK's cheapest Home Phone and Broadband bundle The UK's cheapest Mobile tariffs The UK's cheapest standard Gas and Electricity". Further text in the letter stated "NB. There are terms and conditions to the Utility Warehouse Price Promise. I'm happy to explain it all to you or see the Utility Warehouse website for full details". Small print on the leaflet stated "Charges, terms and conditions apply. For full details of the Utility Warehouse Price Promise see www.utilitywarehouse.co.uk".
The complainant challenged whether the lowest price claims in the ad were misleading and could be substantiated.
CAP Code (Edition 12)
The Utility Warehouse said they were aware there was potential for confusion with marketing of this type and the ad therefore invited consumers to contact a distributor for further information or to visit their website, where full details of the price promise were published. They said the principle of the price promise was that they guaranteed consumers would pay less, on a like-for-like basis, than with their current provider if they switched to them. If they did not pay less, The Utility Warehouse promised to pay double the difference. They said the like-for-like comparison was carried out in a clear and fair way for each of the services they provided. They said their conditional "UK's cheapest" offer was based on the price promise and because they guaranteed to pay double the difference in the unlikely event anyone did not save money with them they were by definition cheaper once that refund had been provided.
The Utility Warehouse said their tariffs had been constructed taking into account their detailed knowledge of the market to ensure they were as confident as they could be that consumers who switched to them would achieve real savings. They made their comparisons based on customer usage of equivalent services provided by other suppliers. They said prices in the market changed frequently, however, and there were a huge number of tariffs available, which made it impossible to create an exhaustive comparison on any given day for every possible usage profile. They said that while they could not therefore exclude the possibility that a cheaper tariff might exist, of which they were unaware, the price promise ensured that consumers would save money as the result of switching. They said they did not advertise directly to consumers but a network of independent authorised distributors, who had no incentive to mislead, promoted their services. They said the ad was an example of a distributor making use of materials made available by The Utility Warehouse. They submitted a copy of the price promise terms and conditions.
The ASA noted the "UK's cheapest" claims were intended to relate to the price promise, under which it was guaranteed that consumers would save money or receive double the difference back. We considered, however, the claims were likely to be interpreted as being lowest price claims, rather than as relating only to a price promise. We noted that if marketers claimed to always offer the lowest prices, or if prices changed so frequently the claim was likely to be inaccurate by the time it appeared, they should use a price monitoring and adjustment policy to ensure the claims could be supported. We considered a price promise did not justify a lowest price claim in the absence of an adequate monitoring and adjustment policy and noted advertisers should be in a position to substantiate lowest price claims. We noted we had not seen any evidence that The Utility Warehouse always offered the "UK's cheapest" tariffs and therefore concluded that the ad breached the Code.
The ad breached CAP Code (Edition 12) rules 3.1 (Misleading advertising), 3.7 (Substantiation) and 3.38 (Other comparisons).
The ad must not appear again in its current form. We told The Utility Warehouse not to make lowest price claims in future, unless they were in a position to substantiate them.