We’ve published today a series of rulings banning the misleading advertising claims by six pay-per-bid auction websites. This action follows our project looking into potentially unfair practices across this sector that were confusing consumers and leaving them out of pocket.
Following today’s rulings, we expect them to get their websites in order and, to help them do so, have provided pay-per-bid businesses with guidance on how to stick to the rules. We’ll be monitoring closely the advertising claims of these companies to ensure the changes are made.
Pay-per-bid auction websites, more commonly known as penny auctions, are a type of timed online auction where consumers pay each time they bid on an item, usually via pre-bought credits. Madbid and Swoggi are the most well-known of these sites.
Our work comes in response to growing concern about potentially misleading and unfair advertising for these services. For example, we’ve received complaints that these sites have been exaggerating savings on items, incorrectly quoting RRPs and not making clear material information such as the cost of bids and how the auctions worked before consumers registered.
The potential for consumer harm and detriment was clear. In line with our strategy to tackle more issues in the round, we launched a project that, rather than solely relying on complaints, allowed us to look at the issues in more depth across the sector.
We carried out a detailed review of advertising in the sector and also liaised with other regulatory and consumer bodies to obtain information about any consumer complaints they had received. This research enabled us to build up a picture of potential problems with these companies under the advertising rules.
Issues we identified included:
• exaggerated claims, especially in relation to RRPs, savings claims and “sold” prices for auctioned items
• a lack of clarity for consumers about how the services worked and associated costs
• significant information was sometimes buried in complex terms and conditions or wasn’t available until after consumers had registered
• inappropriate use of some testimonials
• inadequate labelling of advertising to differentiate it from editorial content
We worked with the main companies in the sector to discuss these issues, ensure they understood their responsibilities under the ad rules and sought assurances that any problem advertising material would be amended. Our sister organisation, CAP also produced guidance covering the main issues we had identified which we sent to all the other pay-per-bid auction websites, instructing them to review their advertising to ensure it followed the guidance.
After carrying out a follow-up monitoring exercise, although some changes had been made, there were still outstanding areas of concern across the sector. As a result, we initiated a series of investigations against all the pay-per-bid auction sites we could identify, culminating in our six upheld rulings published today. All these sites now need to amend their advertising in line the rulings.
Commenting on the rulings and the sector work the ASA has undertaken, Director of Complaints and Investigations, Miles Lockwood said:
“It’s unfair that consumers have been led to believe they’re getting a big discount or bargain when it turns out savings claims were exaggerated and associated costs and terms and conditions haven’t been clear.
Our rulings and guidance put pay-per-bid auction businesses on notice; they need to get their websites in order so that consumers get a fair deal.”
A summary of the six rulings:
(www.madbid.com and www.megabargain24.com)
These websites were misleading because they did not make clear how the auction process worked, including the costs involved and the fact that consumers could only win an auction a limited number of times in a month. We also found that some savings and RRP claims could not be proved, the commercial intent of their ads was not clear, and that the expiry times for offers were misleading.
Sophora Media Ltd
(www.swoggi.co.uk and ww2.moneyexpert360.com)
These two websites did not make clear material information such as the costs of individual bids and credit packages, the nature of their service, the delivery costs, and their geographical address in Singapore. We also found that they could not show that “instead of” or “worth up to” price claims for auction items were the prices at which the products were generally sold. Savings claims, “sold for” prices, offer expiry dates and implied endorsements by the Mirror, The Independent and the Times were also misleading. Lastly, we ruled that the website www.moneyexpert360.com was not identifiable as an ad and that it implied that the website and the articles on it were an independent editorial piece written by an independent party.
This website did not make clear material information about the cost of individual bids and bid packages to consumers before they registered for an account. We also found that their “sold” prices for items in closed auctions were misleading because they did not include the cost of bids, and that “Retail Price” claims and savings claims for these items could not be proved.
The liklebid.com website was misleading because “sold” prices and RRPs could not be proved and because it did not make clear to consumers before registration that they might need to pay a subscription fee and purchase bids in order to take part in an auction. We also ruled that the savings claims on the website and in a paid-for search result on “Google” were misleading.
The website was misleading because RRP claims could not be proved and because the “end” prices shown for auction items did not include all fees paid by the auction winner.
Systematic Entertainment Shopping Ltd
This website was misleading because price savings claims were not proven and "sold" or "closed at" prices for auction items did not include the cost of the bids placed. We also ruled that the website did not make clear how the auction process worked before registration, including the costs involved and the fact that when buying a bid package, consumers would be signing up for a 14-day trial membership after which they would be automatically billed £59.99 per month and that there was a three-month minimum subscription.