Background
Summary of Council decision:
Four issues were investigated, all of which were Upheld.
Ad description
The website www.officialphoneunlock.co.uk promoted unlock services for iPhones.
a. The page entitled "Current Pricelist", accessible via a link from the home page, included a list of phone networks and the cost of the service divided by country. Text at the top of the page stated "Due to our size and buying power, we are confident that you will not find a lower price online. If you find a permanent unlock available from another unlocking company for a lower price on the same day of purchase, we'll match that price!*". Next to each option was a button that stated either "Buy Now" or "Pre-order*". The "Pre-order" options were all priced at £19.99, and stated either "Available in 48 hours - Pre-order unlock for fast delivery" or "Available soon - Pre-order unlock". At the very bottom of the web page, text stated "A pre-order simply means that those unlocks are currently offline whilst we are in negotiations to confirm a price with the carrier and Apple. Hence why the price is always £19.99. Please note this isn't the final unlocking price which may be substantially more expensive - see the pricelist for typical unlock prices, they vary between £29 and £119 so expect something in this region ... Once our negotiations are concluded, you will be emailed the final price which will also be on the website, and you can then complete your order and purchase the full unlock, which will be discounted by £19.99 ... This gives you the opportunity to get unlocked the fastest way, rather than having to keep checking our website to see if the unlock is online yet".
b. The "Pre-order" page accessed when consumers clicked the "Pre-order*" button for T-Mobile in the UK included text at the top of the page which stated "Our official iphone unlock service is the safest, fastest and permanent way to unlock your iPhone locked to T-Mobile UK. With our direct connection to the Apple IMEI unlocking database, this is the best way to unlock your device for any SIM card. Our direct connection to Apple will verify that your handset is locked to T-Mobile UK before purchase, ensuring you don't purchase an incorrect unlock". Upon entering an IMEI and iPhone model, text appeared that stated "Permanent Unlocks Available Again Soon ... Pre-order now to get in the unlock queue T-Mobile UK iPhone 4 £19.99 Unlock available in 48 hours - pre-order now for fast delivery in 24-72 hours". Beneath this, a hyperlinked button stated "Buy Now".
c. The Checkout page, accessed when consumers clicked on the "Buy Now" button stated "Your cart currently contains: Pre-Order Factory Unlock for [IMEI number] (iPhone 4) locked to T-Mobile UK £19.99". A box titled "Contact Details" featured a text box for the consumers' e-mail address and text that stated "Please make sure you enter your email address correctly so we can notify you when the unlock is complete." Beneath this, a hyperlinked button stated "Continue".
d. The payment page, accessed when consumers clicked "Continue", stated "Pre-Order Factory Unlock ... £19.99 VAT: £4.00 ... TOTAL £23.99" and invited consumers to make a purchase. Text stated "Having made payment, we process your IMEI within Apple's iTunes database by marking it as unlocked, and then email you when its [sic] done. You then just plug your iPhone into iTunes, and you're unlocked - allowing you to use your iPhone on any GSM network worldwide without fear of it ever re-locking. This is a permanent and official solution which obviously will not void your warranty, will not require a jailbreak, and is permanent. Don't forget we offer a 100% no quibble money back guarantee".
Issue
1. Four complainants, who after purchasing an unlock "Pre-Order" were billed an additional fee for the unlock service, challenged whether the ads made adequately clear the nature of the "Pre-Order" service, and the cost of the unlock service.
2. Two of the complainants challenged whether the price claims were misleading, as they were shown exclusive of VAT until the payment page.
3. Two of the complainants challenged whether the claim "we offer a 100% no quibble money back guarantee" in ad (d), was misleading, because it did not make clear that the guarantee only applied to the cost of the unlock service, and not the cost of the "Pre-Order" service.
4. One of the complainants challenged whether the claim "Available within 48 hours" in ad (a) was misleading and could be substantiated, because after purchasing the service, his phone was not unlocked within 48 hours.
Response
1. Official iPhone Unlock Ltd (iPhone Unlock) said text on both the pricelist page, prior to entering phone details, and on the payment page, prior to entering credit card information, explained what a pre-order was. They said those sentences were marked in bold. They also highlighted that the FAQ page set out in full what a pre-order was. Finally, they said they had added text to the buy now and final payment pages to explain that an additional payment might be required for pre-orders before the unlock was completed.
2. They said all prices were exclusive of VAT as they were a Seychelles entity. They thought there must have been an IT problem which meant that VAT was accidentally added to their prices for a period of a few days.
3. They said the money-back guarantee appeared on the home page and clearly stated that it only applied to unlocks which did not work. They once again asserted that the pre-order service was clearly explained so consumers knew what they were getting for their money.
4. They explained that once a customer had purchased a pre-order, after a maximum of 48 hours they sent an e-mail to the client informing them of the additional sum required to complete the unlock. They thought the e-mail sent to the complainant to inform him of the full cost of the unlock must have gone to his spam folder, as they always sent the cost of the unlock between 24 and 48 hours after a customer had purchased a pre-order.
Assessment
1. Upheld
The ASA welcomed the fact that iPhone Unlock had made some changes to the site However, we noted that, when the ad appeared, on the price list page, the pre-order entries stated "Available in 48 hours - Pre-order unlock for fast delivery ... £19.99 (24-72 hours Unlock) ... Pre-order*". We considered that consumers would understand the claims to mean that the unlock was not currently available, but would be in 48 hours, and that despite that delay, the full cost of the unlock service would be £19.99. Similarly, we noted that on subsequent pages of the ordering process there was no text to explain that a further charge would be levied and considered that a number of claims, such as "Pre-order now to get in the unlock queue ... Unlock available in 48 hours" in ad (b), "Please make sure you enter your email address correctly so we can notify you when the unlock is complete" in ad (c), and "Having made payment, we process your IMEI within Apple's iTunes database by marking it as unlocked, and then email you when it's done. You then just plug your iPhone into iTunes, and you're unlocked ..." in ad (d) reinforced the impression that the £19.99 charge was for the unlock service, not simply a pre-order, and that after payment the unlock would be completed within 48 hours. We understood, however, that a pre-order purchase was simply a deposit and resulted in iPhone Unlock negotiating with the network provider to finalise the total unlock cost, which would then be e-mailed to a consumer within 48 hours of their pre-order purchase, and the unlock would not be performed until an additional payment (if required) had been received. Whilst we acknowledged that text at the bottom of the price list page explained that the price of £19.99 was not necessarily the full price, and the final price might be significantly more expensive, we considered that that text contradicted rather than clarified the impression created by the initial price claims. We also had concerns that a number of consumers would not scroll down to the bottom of the page and could easily click through to purchase an unlock without being aware of the full cost.
Because we considered that the ads implied that the cost of the pre-order service was the total cost of the unlock service, whereas the price related to a deposit for the unlock service, we concluded that the ads were misleading.
On that point, the ads breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
and
3.4.3
3.4.3
the price of the advertised product, including taxes, or, if the nature of the product is such that the price cannot be calculated in advance, the manner in which the price is calculated
(Misleading advertising), 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 understood that iPhone Unlock said they had accidentally charged customers VAT on their purchases for a period of a few days. We noted, however, that three of the complainants had been charged £23.99 for the pre-order, despite making their purchases in April, May and June. We noted that the Code required quoted prices to include non-optional taxes that applied to all or most buyers, and that VAT-exclusive prices could only be given if all consumers to whom the price claim was addressed paid no VAT or could recover VAT. Because consumers were charged VAT, but the price claims were displayed exclusive of VAT until the payment page, we concluded that they were misleading.
On that point, the ads breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
and
3.4.3
3.4.3
the price of the advertised product, including taxes, or, if the nature of the product is such that the price cannot be calculated in advance, the manner in which the price is calculated
(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),
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.
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).
3. Upheld
We acknowledged that iPhone Unlock said their home page included text that explained that pre-orders were not covered by the guarantee. We noted, however, that text on the payment page stated "we offer a 100% no quibble money back guarantee" and considered that consumers would understand that to mean that pre-orders were also covered by the guarantee. We also had concerns that any qualifying text explaining that the guarantee did not cover pre-orders would contradict such an absolute claim. Because we considered consumers would believe that a refund of any payments would be issued to them if they were not satisfied with any of the service, but that was not the case for pre-orders, we concluded that the claim in ad (d) was misleading.
On that point, ad (d) breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
(Misleading advertising), and
3.54
3.54
Marketing communications must make clear each significant limitation to an advertised guarantee (of the type that has implications for a consumer's rights). Marketers must supply the full terms before the consumer is committed to taking up the guarantee.
(Guarantees and after-sales service).
4. Upheld
We understood that the claim "Available in 48 hours" was intended to explain that after purchasing a pre-order, a customer would be sent an e-mail informing them of the cost of the unlock service within 48 hours. Given the lack of clarity regarding the pre-order service, however, we considered that consumers would understand the claim to mean that the unlock would be completed within 48 hours of the pre-order payment being made. Because that was not the case, we concluded that the claim was misleading.
On that point, ad (a) breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
3.3
3.3
Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
(Misleading advertising).
Action
The ads must not appear again in their current form. We told Official iPhone Unlock Ltd to make clear the nature of their pre-order service, the fact that the advertised cost was only a deposit, and the full cost of the unlock service could be considerably more. We also told them to ensure that if VAT was charged, they included VAT in all their prices unless targeted at business consumers, and to make clear that their money-back guarantee did not apply to pre-order fees. Finally, we told them to ensure they did not state or imply that pre-orders would result in a phone being unlocked in 48 hours if that was not the case.
CAP Code (Edition 12)
3.1 3.17 3.18 3.3 3.4.3 3.54 3.7
