A leaflet for Three featured various pay monthly mobile phone contracts, for example "£30 per month ... The One Plan ... All-you-can-eat data ... 2000 any network minutes ... 5000 texts ... 5000 Three-to-Three minutes ... 24 month contract with no upfront cost".
The complainant challenged whether the ad was misleading, because it did not make clear that the provider could increase the monthly price within the term of the contract.
Three said they did not have the right to increase the monthly recurring price of the contract for any reason other than in line with inflation (RPI). They told us that they had done an audit of the situation and that all mobile operators, broadcasters and Internet Service Providers had virtually identical terms in their contracts. They advised that, were they to increase the monthly tariff for any other reason, then that would be a variation to the contract and customers would have the right to leave with nothing further to pay. They said that, following similar price rises from their competitors, they had carried out an RPI increase in the middle of 2012 and that that was the first time they had implemented an RPI increase in nine years. They said that RPI price increase provisions in consumer contracts were common and that no other mobile operator referenced those provisions in their marketing. They said they believed that, because that was the first RPI increase in nine years, it would not be reasonable to have expected them to reference that contractual term in every piece of marketing they had done for the last ten years on the basis that they may one day exercise that provision. They further pointed out that consumers were provided with a copy of the contract, which they were obligated to read and accept during the sign up process.
The ASA noted that the ad did not make any explicit claims that monthly tariffs would remain fixed and we further acknowledged that the advertiser’s right to raise prices in line with inflation, within the term of the contract, was stated in the terms and conditions which consumers would have to agree to prior to taking out a contract with Three. However, we considered that because monthly prices were stated alongside the term of the contract, without any further qualification, consumers would be likely to understand that those prices would remain fixed for the entire term of the contract. We considered that, because the monthly price of the contract was likely to be of significant importance to consumers when deciding on a mobile phone contract, the potential for the monthly tariff to be increased within the term of the contract amounted to a significant term, which should have been made clear. We therefore concluded that the ad was misleading.
The ad breached CAP Code (Edition 12) rules
Marketing communications must not materially mislead or be likely to do so.
Marketing communications must not mislead the consumer 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 the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means. (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).
The ad must not appear again in its current form. We told Three to ensure that they made any significant terms clear in future.