Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Two ads on www.primussaver.co.uk, for broadband packages:
a. Text on the Primus Saver home page, seen in September 2013 and on 16 May 2014, stated, "Unlimited Broadband for just £2? Really? ... £2.00/month for 6 months + 14.50 line rental ... £2 /month for the first 6 months then £4 /month thereafter ... OFFER ENDS 1 JUNE 2014".
b. Text on the Primus Saver home page, seen on 2 June 2014, stated, "Unlimited Broadband for just £2? What? Really? ... £2.00/month for 6 months + £14.50 line rental ... £2 /month for the first 6 months then £4 /month thereafter ... OFFER ENDS 30 JUNE 2014".
The complainant, whose line rental and monthly broadband charges had been increased during the contractual period, and who understood that the same promotion had been subsequently advertised with a later closing date, challenged whether:
1. the price claims in the ads were misleading; and
2. the promotion was misleading and had been administered fairly.
1. New Call Telecoms Ltd t/a Primus Saver said that increasing the price during a contract was standard industry practice, to the extent that Ofcom had set out mandatory guidelines that they had to follow when making price changes. They said Ofcom permitted price changes during the contract period as long as customers were informed and were permitted to terminate their contract without penalty. They said they publicised the price rise across multiple channels to their customer base and clearly communicated in their correspondence that customers could terminate their contract without penalty. They said that customers who chose an upgrade would not have been affected, and any customer who was within the first four months of their contract would also not have been affected.
2. Primus Saver said they reviewed the offer on a monthly basis to decide whether or not to continue it. They said the offer was still running, and that in such a volatile and price-sensitive market, it was not possible for them to commit to an offer for longer than one month at a time, because cost prices might change.
The ASA understood that the Ofcom guidance to which Primus Saver referred was the ”Guidance on ’material detriment’ under GC9.6 in relation to price rises and notification of contract modifications”. We noted that the guidance stated that it was essential that the ”core subscription price” in a telecommunications contract was made clear to the subscriber at the point of sale and before the subscriber entered into the contract, and that the subscriber should be able to compare offers, make informed decisions, and rely on the price agreed. We understood that, under General Condition 9.6 (GC9.6), if a communications provider wanted to alter a contract's terms and conditions, including raising prices, they must consider, among other things, whether the change would be of material detriment to their customers, and that they must provide customers for whom a change was likely to be of material detriment with one month's notice of the change. At the same time, customers must also be informed that they were entitled to terminate their contract without penalty if the change was not acceptable to them. We noted that the guidance made clear that Ofcom was likely to treat any increase to the price as a modification likely to be of material detriment to consumers.
We noted that Primus Saver publicised the price rise across multiple channels to their customers, and communicated in their correspondence that customers could terminate their contract without penalty. However, we considered that an increase in the monthly price of a contract was material information which was likely to affect a consumer's transactional decision when choosing between broadband packages, and that it should have been presented clearly within the ads. Because that was not the case, we concluded that the ads were likely to mislead in that respect.
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. and 3.4.3 3.4.3 the price of the advertised product, including taxes, or, if the nature of the product is such that the price cannot be calculated in advance, the manner in which the price is calculated (Misleading advertising), 3.9 3.9 Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify. and 3.10 3.10 Qualifications must be presented clearly.
CAP has published a Help Note on Claims that Require Qualification. (Qualification), 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 noted that ad (a) stated, "OFFER ENDS 1 JUNE 2014" and ad (b), which promoted an identical offer, stated, "OFFER ENDS 30 JUNE 2014". We further noted that the ad had since been amended to display a closing date of 31 July 2014. We considered that consumers who had seen ad (a) were likely to understand that, in order to take advantage of the offer, they would need to take the offer up by the advertised end date of 1 June, after which they would not be able to take up a broadband contract on those terms. We considered that the closing date of a promotion was significant information for consumers, and that the knowledge that a promotion was about to end might prompt a decision to purchase, which would not have been taken had the closing date not existed. We concluded that the ad was likely to mislead consumers into taking a transactional decision which they would not have taken otherwise, and that the promotion had been administered unfairly.
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 8.2 8.2 Promoters must conduct their promotions equitably, promptly and efficiently and be seen to deal fairly and honourably with participants and potential participants. Promoters must avoid causing unnecessary disappointment. (Sales promotions), and 8.17.4e (Significant Conditions for Promotions).
The ads must not appear again in their current form. We told Primus Saver to ensure that increases in monthly prices were communicated prominently in their ads, and to ensure that they did not mislead consumers by stating that a promotion would end on a particular date if that was not the case.