Ad description

A website, www.cazoo.co.uk, for the car retailer Cazoo seen on 4 June 2021. Under the menu heading “Find a car” a link stated “New cars for subscription”. A web page with the heading “New cars available for subscription” included text which stated “With Cazoo, you can subscribe to a new car and your insurance, maintenance, servicing and tax is all included for one monthly payment. All you need to do is add fuel” and a link labelled “Search new cars”. A search result of cars could be filtered by “New cars” and “Used cars”, and when filtered by “New cars”, each car listing featured a label which stated “New car – subscription only”.

Issue

The Scottish Motor Trade Association, which believed pre-registered cars were described as ‘new’, challenged whether the claims that the cars were “new” were misleading.

Response

Cazoo said their subscription service was a regulated consumer hire business where the consumer hired a car from Cazoo for an agreed period. They said none of the cars available to hire through their subscription service were available to buy on the Cazoo website.

Cazoo said that if consumers purchased a pre-registered car, the consumer’s name would be second on the registration document (which would have a detrimental effect on the car’s asset value) and there were circumstances in which additional products like warranty, insurance and breakdown cover would be affected. Cazoo believed none of that detriment existed for their subscription service. The consumer never owned the subscription car so the impact of pre-registration on the asset value of the car was irrelevant to them. Similarly, the subscription service included additional services such as insurance and breakdown recovery so the pre-registered status of Cazoo’s subscription cars was immaterial to the consumer.

Cazoo said pre-registration was also a legal necessity for the Cazoo subscription service. Cazoo was the owner of each car that was made available for subscription on their website and remained so throughout the term of any active subscription. When the car was bought for that purpose, Cazoo said they had a legal obligation to register the car and therefore all their subscription cars listed as “new” were necessarily pre-registered.

Cazoo said by contrast, it was established practice to buy a new car without the dealer pre-registering the car. Instead, the dealer typically made the first registration at the Driver and Vehicle Licensing Agency on behalf of the buyer, so the buyer was the first name on the list of registered keepers for the car.

Cazoo said that for subscription customers, factors which affected the asset value of the car like pre-registration were irrelevant to assessing whether the car was “new”. Cazoo believed subscription consumers understood the label “new” to correspond to the car being high quality and having very low usage before they got it. The new cars offered as part of the Cazoo subscription service all had fewer than 500 miles on their odometers. They said that allowed very limited driving for testing, delivery and demonstration, and meant that their subscription customers received cars that were very high quality and as near to the beginning of their operational lives as was practically possible. Cazoo said that they offered a guarantee which allowed their customers to return a car within seven days from the start of their subscription and to drive 250 miles during that time. They said if a subscription car was returned in that way, then they would re-list the car as “new” after inspection and valeting, but only if the car’s condition remained very high and the car’s mileage remained below 500 miles. Cazoo said that only a small percentage of cars had been returned in that way since their subscription service began.

Assessment

Not upheld

The ASA considered consumers would understand that where cars were listed or described in the ad as “new”, they would have minimal mileage and no previous owner.

We understood that buying a pre-registered vehicle would result in a consumer’s name being second on the registration document, and that there were circumstances where warranty, insurance and breakdown cover might also be affected as a result of a vehicle having been pre-registered. As such, we considered it would be misleading to call a car “new” in those circumstances.

However, we understood that cars advertised as “new” on the Cazoo website were only available as part of a subscription service, where consumers could pay a monthly subscription to use a Cazoo car for a fixed time. We understood those cars were not available to purchase through the ad and we considered that where the ad referred to “new” cars, it was clear that those vehicles were available through Cazoo’s subscription service. We understood such cars had minimal mileage and, in the vast majority of cases, had not been used before by a previous customer. We understood Cazoo’s guarantee allowed a car to be used for a limited time before being returned in good condition and with minimal mileage before being re-listed as “new”. However, we understood this only occurred in a very small number of instances and we considered that it would not undermine the claim. Therefore, although we understood new subscription cars were pre-registered, because ownership was not transferred to the consumer, and consumers would not expect it to be, we considered that information would not be material in those circumstances. We concluded that the ad’s description of pre-registered cars as “new” was not misleading.

We investigated the ad under CAP Code (Edition 12) rules  3.1 3.1 Marketing communications must not materially mislead or be likely to do so.    3.3 3.3 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, theĀ  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.
 and  3.4.1 3.4.1 the main characteristics of the product  (Misleading advertising), but did not find it in breach.

Action

No further action necessary.

CAP Code (Edition 12)

3.1     3.3     3.4.1    


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