Background
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
Two ads for Guardian Recovery Ltd, a debt collection agency:
a. A fax received on 28 August 2014 stated "We will collect: overdue accounts, bounced cheques, bad debts. We will: enforce County Court Judgments, trace absconded debtors, credit check potential clients. We offer a guaranteed, fully-inclusive debt recovery service. 110% Money Back Guarantee... Nobody can do more to collect your debt and that's GUARANTEED".
b. A claim on the "Services" tab of www.guardrec.co.uk, Guardian Recovery's website, seen in July 2015, stated "...The services of our Legal Team can be utilised without incurring the often unnecessary expenses of a separate firm of solicitors or a barrister".
Issue
The complainant challenged whether the following claims, in ads (a) and (b) respectively, were misleading and could be substantiated because that had not been his experience:
1. "110% Money Back Guarantee"; and
2. "The services of our Legal Team can be utilised without incurring the often unnecessary expenses of a separate firm of solicitors or a barrister."
Response
1. Guardian Recovery Ltd said they were a company which specialised in helping small and medium sized businesses in seeking the recovery of long-term unpaid and delinquent debt. They charged for their services in seeking recovery which clients had to pay, regardless of whether or not the debt was ultimately recovered; further charges applied if Guardian were successful in recovering the debt.
Guardian explained that their “110% Money Back Guarantee” (the Guarantee) applied to cases where clients sought the recovery of what they classed as “Good debt” and that they guaranteed to perform their services as detailed in their Service Level Agreement (SLA): that they would contact the debtor a minimum of 75 times over 128 days. They explained that “good debt” was classified as debt where: it was not subject to dispute resolution and mediation between the debtor and creditor; it was owed by a debtor who had absconded; the debtor had not entered formal insolvency proceedings before the end of the defined period in which Guardian attempted to contact them; Guardian were in receipt of at least the debtor’s most recent postal address and contact number; and the debt was a true and valid one. Guardian said that where they failed to contact the debtor a minimum of 75 times within 128 days, they repaid the client 110% of the fee.
In response to the complainant’s particular experience, Guardian said that he was not entitled to a refund under the Guarantee. They said that the debt was subject to a formal and written dispute and therefore, it was no longer considered to be “good debt” as defined by Guardian. Therefore, at that point, the complainant’s case was no longer covered by the Guarantee. Additionally, Guardian said the complainant had asked for the case to be escalated to Guardian’s legal team and in doing so, Guardian considered the terms of the SLA had been satisfied as well.
2. Guardian Recovery Ltd explained that a full legal support service was included in their client’s fees and they provided a list of duties fulfilled by their legal team. They referred to their Client Terms and Conditions which stated that where a client instructed Guardian to commence or continue any form of legal action, the client was responsible for checking the accuracy of information contained within all documentation and submissions. It also stated the client was liable for all charges, costs, fees and disbursements of whatever nature relating to such action.
Guardian said that from time to time, after reviewing a potential legal claim, they recommended to clients that independent legal advice should be sought before pursuing a claim. They said they might also recommend that a solicitor or barrister attend a court hearing, but they did not appoint legal representation for their clients. However, that was possible only with their clients’ authorisation and making them aware of the further, additional costs that they would incur as a result.
In response to the complainant’s particular experience, Guardian had recommended that they sought independent legal advice because the case centred on a legal point and because they had reached an impasse with the debtor’s legal representative. Following extensive correspondence with the debtor’s legal representative and the circumstances on which the case now turned, they felt the complainant was left with no option other than to pursue their case through the courts. Given the potential financial costs which might be incurred to the complainant should the claim go against him, Guardian recommended that the complainant seek independent legal advice. They said that had the complainant done so and obtained an opinion that suggested his claim might be successful, their own legal team were prepared to complete the claim and evidence to the courts as part of their service.
Assessment
1. Upheld
The ASA noted the ad outlined some of the elements included with Guardian’s service and that they offered a money back guarantee. The ad stated that conditions applied and referred potential clients to their website for further information. We therefore considered potential clients were likely to understand that the full list of conditions could be found there.
We acknowledged the circumstances which led to the complainant being refused a refund under the guarantee. We understood from Guardian they guaranteed to contact the debtor a minimum of 75 times over 128 days and the guarantee applied only to “good debt” as defined by Guardian.
Although we understood that potential clients were provided with further, additional information when they had a consultation with Guardian and that the terms of the Guarantee were explained to them at that time, we noted the guarantee was limited to complying with the SLA and that it applied only to debt which met the specific definition of “good debt” applied by Guardian. We considered these were significant conditions to the guarantee which were likely to affect a potential claimant’s decision to pursue their outstanding debt using Guardian and therefore, they should have been made clear in the ad. Because they were not, and it would not become clear to potential clients that those conditions applied until they had taken the further step of finding out more information, we considered consumers were likely to be misled as to the circumstances in which they might be eligible for a refund. We therefore concluded 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 3.9 3.9 Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify. (Qualification).
2. Upheld
We noted Guardian’s reasons for recommending the complainant seek external legal advice. However, we considered the claim “The services of our Legal Team can be utilised without incurring the often unnecessary expenses of a separate firm of solicitors or a barrister” implied that their legal team, and therefore the legal services included in the charge, were able to perform the same/or all the services as that which might be offered by a firm of solicitors and/or barristers. However, we understood from Guardian that there were some processes, which could become part of a client’s debt recovery claim and which could not be completed by their legal team, for example the attendance of a solicitor/barrister at a court hearing. We considered the claim was likely to be interpreted as that the legal services offered covered all processes related to pursuing a claim. Because we understood that might not always be the case and that had not been made clear on the web page, we considered the absence of that qualification from the web page was likely to mislead.
On this point, the ad breached CAP Code (Edition 12) rule 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising).
Action
The fax and web page must not appear again in their current form. We told Guardian Recovery Ltd to ensure the limits of any money back guarantee were made clear and to make clear that there may be circumstances in which external legal representation might be needed.
