ASA Adjudication on Marcândi Ltd t/a Madbid.com
a. the press ad appeared on 27 November 2010 and included references to savings it stated were an average of 80% off high street prices or RRPs. It included examples of products that had been won in recently closed auctions; for example, a MacBook Air was shown with text that stated "SOLD £47", "RRP £1,149" was struck out. The ad also included text that stated "Unlike many sites such as reverse auction sites, Mad-bid is not a game of chance but one of skill ... ".
b. the first TV ad was viewed between December 2010 and February 2011. It included a voiceover that stated " ... you won't believe some of the bargains people have walked away with. Like this brand new Ford Focus for £800. A MacBook Air, £47. This iPhone, just £30. And this TV for just £23 ... ". The products and corresponding prices were shown on screen as they were mentioned. Text on screen stated " ... Savings against RRP. P&P applies to all products. Cost of bids excluded".
c. the second TV ad was viewed between December 2010 and February 2011. It showed an iPhone with text that stated "SOLD! £20.90". A voiceover stated "check out Madbid.com's online auctions now. With an average saving of 80%, you'd be mad not too". Text on screen stated " ... Prices include VAT and P&P. Savings against RRP. Cost of bids excluded".
Issue
One complainant challenged whether:
1. the “80%” average savings claims in ad (a) were misleading and could be substantiated; and
2. the claim “ ... Mad-bid is not a game of chance but one of skill ... ” in ad (a) was misleading.
3. Three viewers challenged whether the stated prices in ads (b) and (c) included the cost of the winner’s bids.
4. Viewers also challenged whether ads (b) and (c) made clear Madbid.com was a paid auction site, with a cost associated with each bid.
Response
1. Madbid.com (Madbid) said the savings claim could be substantiated and had been approved by the relevant clearance bodies in relation to broadcast advertising. They said their auction report showed that there was an average saving of 81 per cent for closed auctions. They submitted a spreadsheet that related to two Macbooks that had been sold as well as the auction report.
2. Madbid said their legal advisors had told them that guidance published by the Gambling Commission was helpful in supporting their argument that the site was a competition based on skill rather than chance. They had also been advised that there were very good arguments to say that penny auctions were a form of commercial activity and nothing at all to do with gambling. Madbid said the site was considered to be an interactive social auction site, which fell under the wider definition of e-commerce. They said the claim was no longer being used and would not be used again in future. They submitted documents from their legal advisors.
3. & 4. They said they had quoted a price for the Macbook Air that was higher than prices that could have been given. They said many auctions closed each day and Macbooks were often sold to users for less than the stated £47, including the cost of winners’ bids. Madbid submitted some invoices and a table of examples of closing prices for Macbook auctions. They said there was no intention to mislead the public into believing goods were sold for less than was the case. They subsequently said the stated price of £47 for the Macbook Air had been removed from their press advertising and had been replaced with a corresponding price that included the cost of bids.
In relation to ads (b) and (c), Madbid said they made clear the cost of bids was excluded however their ads had since been amended to state prices that were inclusive of the cost of bids, postage and packaging and the final auction price, and to include text that stated what the prices shown included. They said the new price claims could be supported with invoices that detailed the price of the item and the cost of the bid. Madbid said bidders could not participate in most traditional auctions without a prior payment, for example in the form of a fee or catalogue. They said they also suggested adding the text “pay to bid auction site” to the ads.
Clearcast said, in response to a previous ASA investigation, ads (b) and (c) included the text “Cost of bids excluded”. Since then however, Madbid had decided to include the cost of winners’ bids in the prices stated and therefore the text in more recent TV ads stated “Cost of bids included”. They said they had seen invoices to support that and submitted copies of the invoices. Clearcast said they considered the on-screen text and the image in ads (b) and (c), of a cartoon character holding a gavel, made clear that Madbid was a paid auction site with a cost associated with each bid.
Assessment
1. Upheld
The ASA noted the evidence submitted by Madbid. We considered the “80%” average savings claim in ad (a) was likely to be interpreted as being relevant to all Madbid auctions. We therefore considered the spreadsheet, which consisted of only two entries in relation to Macbooks and included typed RRPs that differed greatly between two products both labelled “Macbook”, was insufficient to support a general savings claim. We noted the auction report also included only typed RRPs; it did not demonstrate where the products were available at the stated RRPs or that those were the prices at which the products were generally sold. We also noted that many of the entries related to Madbid credits, which were sold only by Madbid, and could be used only to make further bids, rather than relating to a product that was also available elsewhere for which it was possible to achieve a comparative saving. We considered items that were sold only by Madbid could not be used as part of the basis for a savings claim, in particular, but not only, because the ad referred to savings on RRPs and high street prices. Because we had not seen adequate evidence that users of the site achieved average savings of 80 per cent on the prices at which products were generally sold, we concluded that the ad was misleading.
On this point, ad (a) breached CAP Code (Edition 12) rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. (Misleading advertising) and 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).
2. Upheld
We understood Madbid operated as a penny auction site, where each bid on a product raised its price by one penny at a time. We also understood that each bid made on an item carried a certain cost and that if a participant bid 15 times on one item, for example, they would have to pay 15 times the cost of a bid (regardless of whether or not they won) plus the closing auction price (if they won). We noted the advice from Madbid’s legal advisors to the effect that, based on their understanding of how the bidding operated, Madbid’s auction process appeared to involve sufficient skill such that it could not be categorised as a process dependent wholly on chance; i.e. it was not an unlawful lottery. We noted the guidance from the Gambling Commission to which the advertiser’s legal advisers drew attention, and we accepted that the auctions did not appear to be dependent wholly on chance. We also noted, however, that their advice expressed concern that in instances where the winning bid was disproportionately low compared to the value of the ‘prize’, there was a risk that the outcome could be considered to be more dependent on chance than skill. We noted that the winning scenarios featured in Madbid’s advertising did involve disproportionately low bids, and that the outcome of the bidding process would not depend on skill alone, depending on outside factors such as the number of participants and their spending behaviour. In the circumstances we considered that the clear statement in ad (a) that “Madbid is not a game of chance but one of skill” was misleading.
On this point, ad (a) breached CAP Code (Edition 12) rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. (Misleading advertising) and 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. Upheld
We acknowledged Madbid said they had changed their price claims to include the cost of winning bids. We understood, however, the nature of the Madbid site was that each bid made on an item carried a certain cost and a winning participant would have to pay for the number of bids they had made, on top of the closing auction price. We noted the prices in ads (b) and (c) did not include the cost the winning customers had incurred in bidding for the products and therefore they did not represent the full price paid by the successful bidders. We concluded that the ads were misleading.
On this point, ads (b) and (c) breached BCAP Code rules
3.1
3.1
Advertisements must not materially mislead or be likely to do so.
and
3.2
3.2
Advertisements must not mislead consumers 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 consumers need in context to make informed decisions about whether or how to buy a product or service. Whether the omission or presentation of material information is likely to mislead consumers depends on the context, the medium and, if the medium of the advertisement is constrained by time or space, the measures that the advertiser takes to make that information available to consumers by other means.
(Misleading advertising) and
3.18
3.18
Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product or service depicted in the advertisement.
(Prices).
4. Upheld
We considered it was clear from both the name of the advertiser and the ads themselves that MadBid.com was an auction site. We therefore considered viewers were likely to understand the nature of the service. We also noted the text “Cost of bids excluded” was shown in ads (a) and (b). We considered however the text was not sufficient to make clear there was a cost associated with each bid. We considered the cost associated with each bid was a significant condition, which should have been made clear in the ads. Because the ads did not make clear there was a cost attached to making each bid, we concluded that they were misleading.
On this point, ads (b) and (c) breached BCAP Code rules
3.1
3.1
Advertisements must not materially mislead or be likely to do so.
and
3.2
3.2
Advertisements must not mislead consumers 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 consumers need in context to make informed decisions about whether or how to buy a product or service. Whether the omission or presentation of material information is likely to mislead consumers depends on the context, the medium and, if the medium of the advertisement is constrained by time or space, the measures that the advertiser takes to make that information available to consumers by other means.
(Misleading advertising) and
3.18
3.18
Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product or service depicted in the advertisement.
(Prices).
Action
The ads must not appear again in their current form. We told Madbid not to make savings claims if they did not hold robust evidence to support them. We told them not to imply the auctions were based on skill if that was not the case. We also told them to ensure stated prices included the cost of the winner’s bids and to ensure their advertising made clear there was a cost associated with each bid.
BCAP Code
CAP Code (Edition 12)
More on
