ASA Ruling on Paul Godber
Paul Godber t/a
Iron Horse House
50 Albion Street
20 February 2013
Internet (on own site)
Number of complaints:
The website www.ironhorsehouse.co.uk, promoted software add-ons for a train simulator game. The price for each product was listed as a particular amount "+ VAT".
The complainant challenged whether the price claims were misleading, because they were exclusive of VAT.
CAP Code (Edition 12)
Iron Horse House (IHH) stated that they were not a UK registered company and that the point of sale was in California. They therefore did not consider that the claims made on their website were within the ASA's remit.
In addition, they asserted that it was impossible for the website to be misleading as every price claim was immediately qualified with text stating that VAT applied to the price. They said that text was clearly displayed and given equal prominence to the quoted prices. In addition, they stated that approximately 30% of their sales were made to customers who did not pay VAT, and therefore if the price claim was inclusive of VAT then those consumers would be misled.
The ASA acknowledged Iron Horse House's belief that their website was not within the ASA's remit as they were not a UK based company. We noted, however, that the website's URL had the top-level domain ".uk", that all the prices were given in sterling, and that the e-mail addresses provided to enable consumers to contact IHH all ended ".co.uk". We therefore considered that the website originated in the UK and fell within the ASA's remit.
We noted that the CAP Code made clear that VAT exclusive prices could be given only if all customers to whom the price claim was addressed paid no VAT or could recover the cost of VAT. We understood that all the price claims on the site were quoted exclusive of VAT but that approximately 70% of the site's customers paid VAT on their purchases. We therefore considered that the price claims were not clearly addressed to consumers who did not have to pay VAT and that the site should have displayed VAT-inclusive prices with at least equal prominence to the stated prices.
Because VAT was not included in the stated prices, and because the majority of Iron Horse House's customers would have to pay VAT, we concluded that the price claims were misleading.
The claims breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising) and 3.18 (Prices).
The claims must not appear again in their current form. We told Iron Horse House to ensure that, unless their price claims were clearly addressed to consumers who paid no VAT or could recover VAT, they displayed VAT-inclusive prices.