Summary of Council decision:
Three issues were investigated, of which one was Not upheld and two were Upheld.
A TV ad and the website www.purplebricks.com, seen on 6 February 2016, promoted Purplebricks, an online estate agent:
a. The TV ad included an agent viewing a client’s property, who stated, “You could save thousands”. Small print stated “Based on average estate agent’s commission - Source: Which? Survey 2011”.
b. The website included the claim “£4,158 AVERAGE CUSTOMER SAVING WHEN SELLING”. Next to that text was a circle with an “i” inside. When that was clicked, further text appeared which stated “Savings based on Purplebricks average sale price (day one of trading until January 2016) with the UK average commission rate of 1.5% applied. Rates vary”.
1. The complainant, who noted that the Which? survey referenced in the ad was over five years old, challenged whether the claim “You could save thousands” in ad (a) was misleading.
2. The complainant challenged whether the claim “£4,158 AVERAGE CUSTOMER SAVING” in ad (b) was misleading and could be substantiated.
3. The complainant challenged whether the same claim in ad (b) could be verified.
1 & 2. New Broom Ltd t/a Purplebricks said in order to calculate the savings, they had taken the national average property price and calculated the value of the commission that could be charged to consumers by a high street estate agent according to the national average commission. They then compared this to the fixed fee they would charge for the same average property price.
They explained that they had two sources from which the national average estate agent commission had been established. For ad (a), they explained that a Which? survey from 2011 stated that estate agency commissions varied between 0.75% and 3.5% with a national average of 1.8%. They said they had used that information to calculate the average difference in cost between purchasing a property with them versus a traditional estate agent, and because the 2011 Which? survey was still the most recent survey conducted by an independent third party, it continued to support the “you could save thousands” claim.
To support ad (b) Purplebricks also provided an email from a third party, a large and well established conveyancing firm operating nationally with the exception of London, which stated that the average commission charged, from their experience, was between 1.1% and 1.8% at the time of writing their email in May 2016. From this, Purplebricks had calculated a national average commission of 1.5%.
Purplebricks said that, in contrast, they charged consumers a fixed estate agency fee of £798 including VAT outside of Greater London, and £1,158 including VAT within Greater London.
To demonstrate the average property price, Purplebricks provided data sourced from a third-party property advertising website which stated that the average asking price of a property in the UK was £303,190. They explained they had compared their fee in comparison to the average commission charged by high street estate agents in relation to a property price of £303,190, which demonstrated that consumers “could save thousands” or, more specifically, £4,158.
In relation to ad (a) Clearcast explained that the 2011 Which? survey was the only official survey conducted and they believed it was adequate to support the claim because the average fee was still consistent with current market trends. They said they had advised Purplebricks that the ad would need to be updated once a new survey became available.
3. Purplebricks said they would update their website to include information that would allow consumers to verify the saving claim.
1. Not upheld
The ASA considered that viewers were likely to understand from the ad that they could save a significant amount of money when selling a property through Purplebricks, in contrast to a traditional high street estate agent. The exact amount, however, would depend on their particular circumstances.
We understood that the savings claim in the ad compared the cost of selling a property with a traditional high street estate agent versus using Purplebricks. We reviewed the information provided in relation to the UK average commission fee and noted that both indicated the commission charged varied, but that the average was around 1.5–1.8%. We noted that the Which? survey was dated 2011 and that its methodology did not lend itself to the purpose Purplebricks were trying to use it for. Further, we did not consider that a communication from one conveyancing firm was adequate to demonstrate the national average commission rate. Despite those concerns, however, we understood that given Purplebricks’ business model and the fact that they charged one of two fixed fees, an estate agent would be required to offer a very low commission for consumers to not make a saving with Purplebricks.
We noted that a property valued at £300,000 would yield an estate agent commission of £3000 if charged at 1% of the sale price, which was demonstrably more than the Purplebricks fee of £798 or £1,158. We understood that Purplebricks charged more for their services in London, and select additional services. However, we considered that given the range of estate agent commissions both in and outside of London, and the variance in property prices across the UK, Purplebricks’ fixed fees were likely, in many cases, to be lower than that of an estate agent commission. In many cases consumers could also save a significant amount of money in comparison to paying an estate agent’s commission fee. Therefore, given how we considered viewers were likely to interpret the claim, we concluded that the ad was unlikely to mislead.
We investigated the ad under BCAP Code rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. (Misleading advertising), 3.9 3.9 Broadcasters must hold documentary evidence to prove claims that the audience is likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation), 3.33 3.33 Advertisements that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, consumers about either the advertised product or service or the competing product or service. (Comparisons with identifiable competitors), but did not find it in breach.
We considered that consumers who read the claim would be likely to understand that, based on Purplebricks’ average sale price and average fee charged, customers could save around £4,158 when selling a property through Purplebricks, in comparison to a high street estate agent charging a commission of 1.5%.
We understood that to substantiate the claim, Purplebricks had provided evidence showing the average asking price in the UK, from a property advertising website dated March 2016. We noted that the claim referred to Purplebricks’ own average selling price. We did not, however, consider that the data from a property website, particularly as it did not show the price at which the properties were sold, was adequate to confirm Purplebricks’ average sale price. Purplebricks had also not provided any of their sales data to demonstrate their average fee, how it was calculated, and whether the higher London rate or any optional fees, were reflected in their saving calculation. We noted that the ad referred to the average commission fee of 1.5%. However, as mentioned in point 1 above, we did not consider that the email from a conveyancing firm and the Which? report were adequate to confirm that this was the case.
In light of the above, we concluded that the claim that consumers could save £4,158 with Purplebricks in comparison to traditional high street estate agents, had not been adequately substantiated and was likely to mislead.
The ad breached CAP Code (Edition 12) rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation) and 3.33 3.33 Advertisements that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, consumers about either the advertised product or service or the competing product or service. (Comparisons with identifiable competitors).
We welcomed Purplebricks’ willingness to make changes. To fulfil the verifiability requirements of the Code, an ad that featured a comparison with an identifiable competitor needed to include, or direct a consumer to, sufficient information to allow them to understand the comparison, and be able to check the claims were accurate, or ask someone suitably qualified to do so.
Although a specific competitor was not named in the ad, we considered consumers would understand that the claim referred to high street estate agents in general. Although the ad explained that the saving was based on the fee charged by Purplebricks for their average sale price, versus the amount a consumer would pay if the UK average commission fee of 1.5% was applied, we noted that the ad did not disclose what that average sale price was. Further, it did not state or provide a signpost (such as a link or address) to additional information, such as how they had calculated their average property sale price (and their associated fee) and details of the source for the average estate agent fee.
In the absence of that information, we did not consider that the ad allowed consumers or competitors to verify the comparison and therefore concluded that it was in breach of the Code.
The ad breached CAP Code (Edition 12) rule 3.35 3.35 They must objectively compare one or more material, relevant, verifiable and representative feature of those products, which may include price. (Comparisons with identifiable competitors).
Ad (b) must not appear again in its current form. We told Purplebricks to ensure that they held adequate substantiation for their savings claims, and to ensure that any comparative claims with identifiable competitors were verifiable.