Dell Computer Corporation Ltd Dell House Cain Road Bracknell Berkshire RG12 1LF Number of complaints: 1

Date: 28 May 2008 Media: Direct mail Sector: Computers and telecommunications Agency: GCI Group

Ad
A direct mailing for Dell computers, sent to businesses, was headed "LIMITED TIME DEALS AT DELL!".  A PC was offered for £249 and a laptop for £199. Text underneath the price for each of the special offers stated "EXCL. VAT & DELIVERY".   Smallprint at the bottom of the mailing stated "... Delivery charge is £51.06 excl VAT (£60 inc. VAT) per system (unless otherwise stated) ... Dell collection charge is £57.58 inc. VAT per system ...".

Issue
1. A recipient believed the mailing was misleading because the delivery and collection charges added significantly to the quoted prices and exceeded what he believed were normal delivery charges.

2. The ASA challenged whether the mailing should have included the amount or rate of VAT payable on the computers.

The CAP Code:

7.1;15.2

Response
1. Dell said they were no longer charging customers for collection and explained that the reference to a collection charge was printed in error.  They said the text had been copied from a previous mailing, printed when they were testing a collection charging scheme. They believed most customers, particularly business customers, were aware of their business model of internet or telephone sales.  They said they had taken steps to prevent errors of this kind happening again.

Dell explained their delivery charge was set at a standard rate per system, regardless of the cost of the system and their computer systems ranged in price from thousands to a couple of hundred pounds and acknowledged that for cheaper or reduced price computers the proportionate cost of delivery increased.  They said the mailing was designed for business customers who would recognise it as such; they said the targeted recipients were Small Business Targets sourced from lists of small business customers and Dell's existing small business customer lists.  They believed that it was generally accepted that the main body of a business mailing was unlikely to set out all the details that would normally be included in the main body of a consumer ad and that it was reasonable to expect business customers to have more experience in purchasing products than consumers.  Dell said business customers would expect there to be delivery charges and would look to ascertain the total cost, including delivery.  They argued that the delivery charge was placed close to the price in the ad, and that its positioning was sufficiently prominent not to be overlooked by a purchaser of hardware familiar with procuring products on behalf of their business.  They said business customers would understand that they needed to read the terms and conditions in the mailing in order to understand the full nature and cost of the offer.  Dell said, in this case, the mailing had stated clearly that the price excluded the delivery charge and the small-print terms and conditions had included the cost of the delivery charge. They did not believe the mailing would mislead any business customer because the text "EXCL. VAT AND DELIVERY" was placed below the price and the small-print stated "All amounts set out above exclude VAT and delivery".  Dell said they were about to implement a new delivery charging structure for business customers.  

2.  Dell said the ad targeted UK business customers exclusively.  Dell said recipients would understand that the mailing was sent to business customers in relation to their work because it was for a computer designed for home offices and businesses and the mailing stated "We believe in small business" and "Dell recommends Windows Vista Business".   They also pointed out that there were six references to Business or b2b in the ad. They believed it was clear from the mailing that the price excluded VAT.  They said business ads did not usually include VAT in the price and their business customers would expect to check to see whether VAT was included and would know that VAT was charged at 17.5%.  They did not believe the mailing was misleading. Dell nevertheless said they would include the applicable rate of VAT in future business communications.

Assessment
1. Upheld
The ASA noted Dells assurance that they did not impose a collection charge.  However, although we acknowledged that details of the charge had been included in the mailing in error, we considered the mailing had nonetheless contained misleading information by implying that there was no option but to pay for either delivery or collection.  We reminded Dell that non-optional charges imposed on all buyers should be included in the headline price.  

Although we noted Dell had a standard delivery charge for all computer systems, regardless of the price of the system, we also noted the £60 charge added significantly to the advertised cost of the low priced computer systems being offered. We therefore considered that the cost of delivery should have been made more prominent in either the main body of the mailing or by a clear, direct link to the small-print.  We concluded that the presentation of the mailing gave a misleading impression of the total cost customers would have to pay for the computer.

On this point, the mailing breached CAP Code clause 7.1 (Truthfulness).

2. Upheld
We noted the mailing was addressed to business customers.  However, we reminded Dell that the CAP Code allowed marketing communications likely to be read mainly by businesses able to recover VAT to quote prices excluding VAT or other taxes and duties provided that prominence was given to the amount or rate of any additional costs.  We considered that, because the mailing did not include prominent information about the VAT rate payable or the price inclusive of VAT, the mailing breached the Code.

On this point the ad, breached CAP Code clauses 7.1 (Truthfulness) and 15.2 (VAT).

Action
We welcomed Dell's assurance that they would include a reference to the cost of VAT in their future business mailings.  We told them to ensure that significant delivery charges likely to apply to most recipients were made more prominent in future.

Adjudication of the ASA Council (Non-broadcast)