Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Claims in an e-mail newsletter promoting a broadband package with TalkTalk. Text under the heading "This week" stated "£80 vch with hot TV/b'band bundle". Text in bold in the main part of the e-mail stated "Urgent £80 Love2Shop vch on hot TV, phone & b'band deal. MSE Blagged". Further text stated "Via this TalkTalk TV Essentials* link, newbies with non-cable phones get: 1) TV, calls & unltd b'band for £7.50/mth. (B'band avail to 85% of UK.) 2) You need its line rent. It's £15.40/mth, but cut that paying £126 for a year upfront. 3) £80 Love2Shop vch. Valid at Argos, Boots, etc (log on to get). The total? Over the 18mth contract it's £353. Take off the £80 vch, it's equiv to just £15/mth".
The complainant challenged whether the claim that the broadband package could be purchased for a cost "equiv to just £15/mth" was misleading, because:
1. it had been calculated on the assumption that customers would pay 12 months' line rental up-front; and
2. it had been calculated by subtracting the value of an £80 voucher from the actual cash price.
1. Moneysavingexpert.com Ltd confirmed that the claim "equiv to just £15/mth" had been based on the assumption that consumers would pay the first 12 months' line rental in one up-front payment of £126, and the following six months' line rental in six separate instalments of £15.40 each. They stated that that approach was made clear in the claim "You need its line rent. It's £15.40/mth, but cut that paying £126 for a year upfront" and stated that, in view of that as well as the reference in the ad to the total cost of the package as £353, they considered that consumers would not be misled.
2. Moneysavingexpert stated that where vouchers were offered as an incentive to enter into a broadband deal it was their practice to calculate the equivalent monthly price, taking account of the voucher's value. They said that approach offered consumers a consistent and effective way to compare different types of offer and make an informed choice. They noted that the headline claim "£80 vch with hot TV/b'band bundle" referred to the voucher but did not include a monthly equivalent price for the package, and said the ad made clear that the voucher, which they commented was widely redeemable, was for a third party and, through the text "Take off the £80 vch", that its value was deducted from the overall cost of the deal.
The ASA considered that consumers would understand from the inclusion of the word "equiv" that, whilst it was not possible to pay £15 per month for the duration of the contract in exchange for the advertised service, that service could be obtained by paying the service provider a monetary amount that, when divided by the minimum number of months the contract would last, equated to £15 per month. We understood that the calculation made to arrive at the claim that the promoted package cost "equiv to just £15/mth" assumed that consumers would pay line rental for the first 12 months in one up-front sum of £126, and would then revert to making monthly instalments for the remainder of the 18-month contract, at a cost of £15.40 per month.
We considered that, although it was acceptable to use an upfront amount as payment, or part-payment, for the line rental element of the service in order to make a calculation of an "equivalent" monthly cost, that decision needed to be clearly communicated to consumers in order to ensure they were able to understand the actual monthly cost of the service and make an informed decision as to whether and how to respond to the ad.
Text in the ad stated "You need its line rent. It's £15.40/mth, but cut that paying £126 for a year upfront". Although that explained that there were two possible payment methods for line rental, we considered that it did not make clear which of those, and whether singly or in combination, had been adopted by Moneysavingexpert when it made its cost calculation for the package. We also considered that the inclusion of the total cost of the 18-month contract (£353) did not significantly aid consumers' understanding on that point, because of the number of variables that could have factored into that sum. Because we considered that the assumption of differing payment methods, including a partial upfront payment, for line rental over the course of the contract was material information which was not made clear in the ad, we concluded that the claim "equiv to just £15/mth" was misleading.
On that point, the ad breached 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) and 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).
We understood that the calculation resulting in the claim "equiv to just £15/mth" was partly based on the assumed use of the Love2shop voucher as part-payment for the advertised service, but that it was not in fact possible to use the voucher towards the cost of the service. We noted that treating the voucher as cash in the cost calculation negated the benefit to the consumer expressed in the headline claim "£80 vch with hot TV/b'band bundle". However, we were concerned that the approach of including the voucher as a cash contribution towards the cost of the advertised service was likely to mislead, regardless of whether or not it was promoted elsewhere in the ad as an additional benefit of taking out the service.
As noted at point (1) above, we considered that consumers would understand the claim that the TalkTalk broadband package could be purchased for a cost "equiv to just £15/mth" to mean that, in exchange for receiving the service, they would pay TalkTalk an amount that, when averaged across the minimum contract length, corresponded to £15 per month. We noted that, because the Love2shop voucher could be used only to obtain goods from third-party high street retailers and not to obtain a direct discount on the advertised package, the inclusion of the £80 voucher in Moneysavingexpert's calculation meant that this was not the case. On that basis, we concluded that the approach described by the text "Take off the £80 vch" misled as to the monetary value imparted by the Love2shop voucher and, therefore, that the claim "equiv to just £15/mth" was misleading as to the price at which it was possible to obtain the advertised service.
On that point, 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) and 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).
The ad must not appear again in its current form. We told Moneysavingexpert.com Ltd to ensure that future price statements did not mislead by omission, undue emphasis or distortion, and that material information was not omitted from their marketing claims.