Background
Ad description
A Google sponsored search result for Localphone Ltd, a telecoms company, stated "Call Peru for 0.8p/min ... Cheap Calls to Peru - Try a Free Test Call Today!"
Issue
The complainant challenged whether the ad was misleading, because the price quoted was exclusive of VAT.
Response
Localphone Ltd (Localphone) said their ads were in line with those of their competitors and that, when consumers clicked through to their website, the VAT inclusive price was shown. They told us that they had amended the search listing to show the VAT inclusive price but that they felt this put them at a disadvantage compared to their competitors
Assessment
Upheld
The ASA noted the ad quoted a VAT exclusive price and that the Code made clear that VAT exclusive prices may be given only if all consumers to whom the price claim is addressed pay no VAT or can recover VAT. Because we understood that was not the case, we concluded that it was misleading for Localphone to quote a VAT exclusive price in sponsored search results.
The ad breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
(Misleading advertising),
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 ad must not appear again in its current form. We told Localphone not to state VAT exclusive prices unless all consumers to whom the price claim is addressed pay no VAT or can recover VAT.
