Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.
Savings claims are a common promotional tool, often in the form of discounts such as “was £9.99, now £4.99” or sales promotions. Marketers wanting to make claims about the relative cost of their product should ensure that they make the basis of the comparison clear and follow the guidance below to ensure their pricing does not mislead consumers.
Advertisers must ensure that any reference prices, such as ‘was’ prices used to advertise the savings a consumer can make represent a genuine established usual selling price and will not mislead. Recency, pricing history, sales data, sales and distribution channels will all affect whether a higher price is sufficiently established as a usual selling price.
Prices used as a basis for comparison should generally have been the most recent price available. An ad for a necklace from Rosee Fine Jewellery was ruled as misleading because the product had not been sold at the stated reference price for at least 12 months immediately prior to the offer (Rosee Fine Jewellery, 14 February 2018).
The length of time for which a product was sold at the higher reference price will also affect the likelihood of an ad misleading consumers. Generally, the higher reference price should have been charged for a longer period of time than the promotional price. The ASA have ruled that a promotion on a laptop was misleading because the 32-day sale period was significantly longer than the 21-day period for which the reference price was available (DSG Retail Ltd t/a Currys, 14 June 2017. See also Argos Ltd 06 June 2018). Even if the product is not sold at the higher price for less time than the lower price it may still be misleading. An ad for a discount on ice cream which stated "save £1 was £3" was upheld because the product had been on a 21 day price rotation between the higher and lower prices for over a year. As such the product had not been sold at the higher price for enough time to make this is established usual selling price (J Sainsbury plc, 06 June 2018).
Some promotions, especially where they involve products tailored to and priced for the individual specifications of the customer, have the potential to be misleading. It is the advertiser’s responsibility to ensure the higher price (reference price) they use to demonstrate a saving has been reasonably established. A promotion on bespoke window fitting was upheld by the ASA because, while in 2016 the products were sold at the higher price and the discounted price for roughly the equivalent length of time, the intervening periods between the promotions were not sufficient in length to establish that the higher prices were the usual prices (HPAS Ltd t/a Safestyle UK, 28 June 2017).
The ASA may also consider the number of sales made at the reference price, and advertisers should either be able to demonstrate that a significant number of sales were made at this price, or that this higher price was a realistic selling price. In the same ad for Safestyle UK, the ASA ruled that there were not significant sales at the higher selling price outside of the promotional period to establish this as the usual selling price. It therefore considered the discounted price was likely to mislead consumers (HPAS Ltd t/a Safestyle UK, 28 June 2017).
The ASA will consider where an ad appeared and where the advertised product has been sold at the higher reference price when assessing the likelihood of consumers being misled. If an advertised higher reference price is not the usual selling price through that sales channel, or was only charged at a limited number of outlets, then this is likely to mislead consumers, particularly if no further context is given. For example, a reference price used online for a product previously only sold in stores is unlikely to be acceptable.
Advertisers must have the evidence to substantiate that a reference price is genuine. A complaint about an ad for Groupon was upheld because the advertisers only provided the ASA with evidence that the product was sold at the higher reference price for 3 days, which was not considered adequate to support the savings claim (Groupon, 24 January 2018).
Code Rule 3.40 states that quoted RRPs should not differ significantly from the price at which a product is generally sold. Advertisers should take care when using RRP’s to ensure that the price accurately reflects the price that consumers will generally pay for the product across the market. The fact that an RRP was recommended by the manufacturer is not in itself sufficient to demonstrate that this is the price that consumers will generally have to pay. See our AOL on the use of RRP’s for more detailed guidance.
In the past the ASA has applied a rule of thumb that 10% of the products or services advertised should usually be available at the "from" or "up to" price based on the 2010 BIS Pricing Practices Guide. In 2016 the CTSI published new Guidance For Traders on Pricing Practices. This new guidance states that, when using “from” or “up to” to advertise a saving, advertisers must ensure that a significant proportion of sale items are discounted at the maximum saving, and that these claims represent the true overall picture of the price promotion.
Whilst the current guidance no longer uses the 10% rule, and instead states that a significant proportion should be available, it offers no further guidance on what is considered a significant proportion, and the ASA will investigate this on a case by case basis. An email ad for a sports supplement which stated “APRIL SALE UP TO 60% OFF PLUS EXTRA 10% OFF” was upheld by the ASA because only 8% of the items available were discounted at 60% off, which was not considered a significant proportion (The Hut.com Ltd t/a My Protein, 11 October 2017).
When assessing whether an “up to” or “from” claim represents the true overall picture of a sale, the ASA is likely to consider the distribution of sale items across different price ranges. Even if a significant proportion of sales items have the maximum saving, if these sale items are disproportionately in the lower price ranges, an “up to” or “from” claim is still likely to mislead, and there should be a roughly even distribution of discounted products across all price ranges. An ad for a January sale which stated “up to 70% off” was upheld by the ASA because the number of sale items which were discounted by 70% was 8.63%, which was not considered a significant proportion, and because the products in the sale were disproportionately from the lower price ranges of products sold by the advertiser (Better Bathrooms UK Ltd, 4 October 2017).
Marketers should be cautious when making a savings claim based on recent prices. The ASA upheld complaints about a supermarket ad offering a multi-buy offer on cereals. The product was priced at 97p per box between January 2015 and 5 July 2015, and at £1.38 from 6 July 2015. On 7 July 2015 the product was then included in a mix-and-match multi-buy offer of three packs for £3. The ASA considered the offer misleading because the £1.38 was not the usual selling price (Asda Stores Ltd, 4 May 2016).
If a marketer has not sold a product before and wishes to offer it at an introductory price lower than the intended standard price, they should make clear it is an introductory offer rather than discount. Using scored-out future pricing, for example, is unlikely to be suitable. It is also likely that marketers will need to state when the introductory offer will end. At the end of the introductory period, they should ensure the price is increased as indicated.