An e-mail and claims on www.livingsocial.com, seen on 2 January 2013, offered a hotel break:
a. The e-mail showed an image of the hotel and was headed "Boutique Yorkshire Manor Hotel". Further text stated "Crab Manor Hotel at the Crab and Lobster • North Yorkshire, United Kingdom". The price £204 was crossed out and the offer price of £99 appeared in bold orange. The e-mail contained numerous other "escapes" and links to the offers on the LivingSocial website.
b. The promotion stated "Boutique Glamour and Sumptuous Style in North Yorkshire". Under the title "Escape Kit" text stated "• Overnight Stay for Two in a Manor Room • Full Yorkshire Breakfast • Bottle of House Wine if Dining in Two AA Rosette Restaurant • Late 12 p.m. Checkout". Additional text at the side of the web page stated "£99 Original Price £204 ... 51% SAVINGS". The terms and conditions which applied to the offer stated "... • stay must be completed by March 22 2013 ... • Valid on Monday, Tuesday, Wednesday and Thursday only • Voucher not valid 10-22 February inclusive".
The complainant challenged whether the ads were misleading and exaggerated the saving a consumer could expect to make, because on the same day he viewed the LivingSocial offer, he noted that the hotel's website stated that Manor rooms were available from £160 per night, but that the hotel was promoting a £50 discount over the same period as the LivingSocial offer.
LivingSocial Ltd (LivingSocial) said they had designed a meticulous process to ensure their savings claims were genuine. They explained that firstly their Sales team prepared a breakdown of pricing and provided evidence to substantiate the values. Their Production team then verified the figures and communicated with merchants to confirm that all the gathered information was correct.
They highlighted that the offer was for an overnight stay in a double room, a bottle of wine and for late check out. They provided screenshots from the hotel's website which showed that the nightly cost of a double room was £160.00 and that a house bottle of wine cost £24.00. In addition, LivingSocial provided an e-mail between themselves and the hotel in which a member of the hotel's staff stated that they charged £20 for a late check out until 12pm. They also provided receipts from the hotel which they considered showed that the hotel rooms, house wine and late checkout had been sold at those prices. They acknowledged that they had not provided a receipt showing that a consumer had paid £20 for a late checkout fee before the offer went live, but stated that those were rare and that the merchant hadn't been able to locate one. Regardless of that, they considered that they held sufficient evidence to substantiate the "original price" of the deal at £204 and their "51% savings" claim, as they had offered the same package for £99.
They said all the necessary checks for the deal, including the verification of the merchant's signature, price checks and their validation had been carried out on 11 December 2012, and that secondary checks were carried out on 20 December 2012. They highlighted that on both occasions they had carefully checked the merchant's website for any parallel promotions and had not found any independent offers.
They confirmed that the deal went live on 2 January and had sold out on 3 January. They said they had acted in good faith, had no knowledge that the merchant was offering a £50 discount and had no reason to suspect that they were. They highlighted that they had not received any complaints from a customer directly, but if they had done they would have amended or withdrawn the deal immediately.
They said they had since contacted the merchant and asked them to confirm when they had launched their own deal, but that the hotel had simply said the beginning of January and had not provided an exact date. LivingSocial said they suspected the hotel had launched their offer once the LivingSocial deal had sold out on 3 January, as the hotel had declined to sell more via LivingSocial when they contacted them on 2 January. They stated that the deal had been highly successful and therefore they believed the merchant had taken advantage of that success by running their own offer directly rather than extending the offer with LivingSocial.
The ASA understood that on the same day that the complainant viewed the LivingSocial offer, he also viewed the hotel's website and noted that the hotel were offering a £50 discount on all their Manor rooms over the same period. He therefore believed that Living Social had inflated the "normal" price of the offer to ensure the savings claim sounded more generous than it was. We noted, however, that there were no claims in the LivingSocial ad which stated or implied that the offer was exclusive, and we therefore considered that the fact the merchant had decided to run their own concurrent offer did not in itself invalidate the savings claim stated in the LivingSocial ad.
We considered that most consumers would understand the savings claim of "51% SAVINGS" to relate to the price at which the package was normally sold at, and considered that if LivingSocial could provide evidence that the package had been sold at £204 before their offer was published, the ads were unlikely to mislead. We understood that before the deal had been published on their site, LivingSocial had obtained screenshots and e-mail correspondence which they considered confirmed the "original" price of all the elements of the package, the "original price" of the package as a whole, and the savings claim of 51%. They also provided a selection of receipts to show that those elements had been sold at the stated prices. We noted that LivingSocial had provided receipts which showed a room had been purchased for £160 per night and a bottle of house wine sold for £24.00 prior to the offer being published. In addition, although LivingSocial could only provide a receipt showing a consumer had paid £20 for a late checkout charge after the deal had gone live, we noted that they had provided e-mail correspondence between themselves and the hotel, dated 7 December 2012, which stated "Late check out until 12pm £20". We therefore considered that LivingSocial had provided sufficient evidence to show that before the ad was published the package had been generally sold at £204, and concluded that the savings claim of 51% had been substantiated.
We investigated the ad under 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), 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), 3.11 3.11 Marketing communications must not mislead consumers by exaggerating the capability or performance of a product. (Exaggeration), 3.17 3.17 Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product featured in the marketing communication. (Prices) and 8.1 8.1 Promoters are responsible for all aspects and all stages of their promotions. (Sales Promotions), but did not find it in breach.
No further action necessary.