Ad description
Claims for web hosting packages on www.heartinternet.co.uk seen on 14 and 15 December 2011 stated "Starter Pro £2.49 per month - Order Now. Home Pro £7.49 per month - Order Now. Business Pro £10.75 per month - Order Now". The page listed the facilities available with each package. At the very bottom of the page in small white font, against a grey background, text stated "Prices exclude VAT at 20%".
Issue
The complainant challenged whether the pricing claims were misleading because they did not state that a set-up fee of £10 plus VAT applied.
Response
Heart Internet said that a £10 set-up fee applied only to their Starter Pro package and not to their Home Pro or Business Pro packages. They explained that the fee was made clear to consumers twice during the ordering process before they completed the purchase. However, following receipt of the complaint, they agreed to include that £10 set-up fee to the product feature table which consumers could see on the landing page for web hosting and before beginning the ordering process.
Heart Internet said that their website included a footnote which stated "Prices exclude VAT at 20%", which had appeared on their website since April 2011 and which they had understood was acceptable to the ASA. They believed that made clear that their prices excluded VAT and did not believe that any changes to that footnote were necessary.
Assessment
Upheld
The ASA welcomed Heart Internet's decision to amend their website to include the £10 set-up fee in the 'product feature' table. We understood from them that the fee was made clear to consumers, on two occasions, during the ordering process before their purchase was complete. However, we considered that the fee was a significant factor which could affect a consumer's choice to take up the Starter Pro package and because of that, we considered it should have been made clear to consumers before they began the ordering process. Because it was not, we concluded that consumers may be misled into thinking that the monthly fee was the only fee payable, when that was not the case.
We acknowledged that Heart Internet believed the footnote's position, font and size was sufficient to indicate to consumers that they quoted VAT exclusive prices. However, we noted that CAP Code (Edition 12) rule 3.18 3.18 Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable. stated that VAT exclusive prices could only be used when all of their consumers to whom the price claim was addressed did not pay VAT or could recover the VAT. We considered the Starter Pro and Home Pro packages were likely to be seen as packages suitable for consumers, rather than business customers, although we recognised that it may be possible for businesses to buy either package. We therefore considered that the price claims for Starter Pro and Home Pro should have been inclusive of VAT. Because they were not, we concluded that they breached the Code.
We considered that the Business Pro package price claim was likely to be seen as addressing business customers because of its name and noted that in those circumstances Heart Internet could present a VAT-exclusive price. Nevertheless, we considered that they needed to prominently state the rate of VAT payable. Whilst we noted that Heart Internet had placed a footnote at the bottom of the page, we considered that the amount or rate of VAT payable was not sufficiently prominent and concluded that the price claim for the Business Pro package breached the Code
The pricing claims breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
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, 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
3.18
3.18
Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.
(Prices).
Action
The price claims must not appear again in their current form. We told Heart Internet to ensure that price claims directed to consumers included VAT. We also told them to ensure that when directing VAT exclusive price claims towards business customers, they prominently stated the rate of VAT payable.
