Background

 Summary of Council decision:

Two issues were investigated, both of which were Upheld.

Ad description

A sponsored ad on Google, for Interparcel Ltd, stated "Cheap Courier to Europe - Send your package from only £12".

Issue

1.  The complainant challenged whether the claim "Send your package from only £12" was misleading and could be substantiated, because when he tried to use the service he was quoted a higher price.

2.  The ASA challenged whether the advertised price breached the Code, because it did not include VAT, which was a non-optional tax.

Response

1.  Interparcel said that when the complainant saw the ad and tried to take advantage of the offer they were in the process of changing their services, which resulted in them being unable to offer a £12 service to any European countries at that time. They acknowledged the ad should have been withdrawn for the period during which the offer was not available and they apologised for the oversight. They said the new service had now been launched and they were offering a £12 starting price for couriers to 11 out of 39 European countries. They believed they were now compliant with CAP guidance that, where prices were described as "from £X", 10% of the products or services advertised should usually be available at the "from" price.

2.  Interparcel confirmed that the £12 starting price was not inclusive of VAT and the starting price of the advertised service was £14.40 (£12 plus £2.40 VAT). They offered to amend the ad to state "Cheap Courier to Europe - Send your package from only £12 + VAT". They understood it was common amongst their competitors to display prices exclusive of VAT, and provided a number of examples. They considered that if the ASA found their use of VAT-exclusive pricing to be in breach of the Code, it would have ramifications for the whole sector.

Assessment

1.  Upheld

The ASA understood that the price of the service was dependent on the weight and dimensions of the parcel as well as its destination and we acknowledged the price of £12 plus VAT was now available for sending small parcels to 11 European countries. However, because the ad had continued to appear during a period in which the offer was not available, we concluded the ad breached the Code in that regard. We also noted that, because the advertised price of £12 did not include VAT, the service had never been available at the advertised price of £12. We concluded the ad was also misleading in that regard.

On this point, the ad breached CAP Code (Edition 12) rules  3.1 3.1 Marketing communications must not materially mislead or be likely to do so.  (Misleading advertising),  3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.  (Substantiation) and  3.17 3.17 Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product featured in the marketing communication.  (Prices).

2.  Upheld

We noted the CAP Code required prices to include non-optional taxes, duties, fees and charges, except where all consumers to whom the price claim was addressed paid no VAT or could recover VAT. We understood that Interparcel offered their services to non-business as well as business customers and we considered the ad was not addressed solely to business customers. Because the price in the ad did not include VAT, and not all customers to whom the price was addressed would pay no VAT or could recover VAT, we concluded that the price in the ad breached the Code.

On this point, the ad breached CAP Code (Edition 12) rules  3.1 3.1 Marketing communications must not materially mislead or be likely to do so.  (Misleading advertising) and  3.18 3.18 Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT.  Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.  (Prices).

Action

The ad must not appear again in its current form. We told Interparcel to ensure they did not advertise services that were not currently available. We also told them to ensure that all their prices were advertised inclusive of VAT unless all to whom the price claim was addressed paid no VAT or could recover VAT.

CAP Code (Edition 12)

3.1     3.17     3.18     3.7    


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