A website for the online estate agent Purplebricks, www.purplebricks.com/reviews, seen in July 2016, featured nine testimonials from consumers including claims of how much they had saved in fees by using Purplebricks. The first three testimonials stated “Mrs Kay, Blackburn, March 2016. Fees saved £5,682”; “Mrs Roach, Bournemouth, March 2016. Fees saved £3,702”; and “Mr Penfold, Edington, March 2016. Fees saved £7,302”.
Arun Estate Agencies Ltd challenged whether the “Fees saved” claims were misleading and could be substantiated.
Purple Bricks Company Ltd t/a Purplebricks provided information from their records which showed the sale prices achieved by the individuals featured in the first three testimonials. They confirmed that, based on an assumed estate agent fee of 1.8% of the sold price of a property, compared to the £798 fee Purplebricks charged in 2016 to property sellers outside London (or £1,158 in London and the surrounding area), Mr Penfold would have saved the amount stated in the ad, and Mrs Kay and Mrs Roach would both have saved slightly more than was stated in the ad.
In relation to the use of the assumed estate agent fee of 1.8%, Purplebricks said that very few estate agents stated up-front the rate of commission they charged; they had tried to find out other estate agents’ commission rates but were almost always told that it would not be revealed until after a valuation had taken place. They said that agents charged different clients different commission rates, and that some estate agents operated on a hyper-local basis. They therefore believed it would be very difficult to find out the fees charged by estate agents in different areas of the country. They also said that most property sellers would get a valuation and a quote for fees from three estate agents before choosing which agent to sell through. For those reasons, they had based their assumed estate agent fee on the results of a customer survey they had conducted.
They said the survey, which was sent to all individuals who had sold properties through Purplebricks between 19 May 2015 and 7 July 2016, asked respondents to “select the level of commission you were quoted if you had your property valued by a traditional high street estate agent”. Out of 2,308 respondents, 1,805 had indicated the level of commission they were quoted. Purplebricks calculated the average commission quoted as 1.5% for both the 81 respondents in London and the surrounding area (defined as the London postcodes N, SE, SW, EC, E, WC, W and the areas of Twickenham, St Albans, Watford, Ilford, Hemel Hempstead, Enfield, Sutton, Luton and Bromley), and to the 1,724 respondents outside London,.
Purplebricks said their calculations were based on the assumption that the commission rates referenced by respondents would exclude VAT. They said it was the standard convention among high street estate agencies to quote VAT-exclusive prices, so they believed it was likely that the quotes respondents had received for commission rates would not have included VAT.
Purplebricks said the findings of their survey were supported by evidence from independent parties. They highlighted that the Citizens Advice website stated that estate agent commissions were “usually between 1½ - 2½ %”, and that an article on YourMoney.com stated that the “average high street fee is 1.5% ... but charges can be as much as 3%”. They also referenced a 2011 Which? survey and information from a national conveyancing firm which they had referenced during the course of a previous ASA investigation.
Purplebricks said the reference in the survey to “traditional high street estate agents” would be understood by consumers to cover all estate agencies with a high street office, excluding online or “hybrid” estate agencies without high street offices. They explained that the service they offered for their fixed fees included the same services offered by traditional high street estate agencies, although their services were available outside of estate agents’ usual hours of operation.
Purplebricks believed their advertising was not misleading but said that for the avoidance of doubt they had made some amendments to the web page.
The “Fees Saved” claims appeared on the “REVIEWS” web page of Purplebricks’ website in testimonials featuring quotes from named individuals, an image of their property, the town or area in which the property was located, a month and year, the “Days to sell” and “% of asking price”. We considered consumers would understand that the testimonials related to the specific experiences of individuals who had sold their properties through Purplebricks, but that those experiences were broadly representative of the experiences of Purplebricks customers more generally.
With regard to the “Fees saved” claims in particular, we considered consumers would understand the claims to relate to savings the individuals had made on the cost of estate agent fees by selling their property through Purplebricks, compared to the amount they would have been charged by other estate agents. Given that the testimonials related to properties sold in specific areas we considered that consumers would expect that the comparison between Purplebricks’ fees and those of estate agents would relate to the fees of estate agents in those specific areas.
We acknowledged the evidence provided by Purplebricks in support of the three testimonials. However, we were concerned that the evidence provided by Purplebricks was not adequate to support the basis of the “Fees saved” comparison in the ad.
We noted Purplebricks’ explanation that the comparison was against the fees charged by “traditional high street estate agents”. While we considered consumers would understand that the comparison was made against fees charged by other estate agents, we considered it was not clear from the ad that the comparison was being made specifically against ‘high street’ estate agents.
We understood that the service Purplebricks provided was largely similar to that provided by ‘high street’ estate agents. However, we understood it was standard practice for ‘high street’ estate agencies to conduct viewings on behalf of property sellers as part of their fee, whereas Purplebricks charged additional fees if property sellers wanted an agent to conduct viewings on their behalf. We considered it was not clear from the ad that the service provided for Purplebricks’ fee was different to that of ‘high street’ estate agents.
We next considered the evidence Purplebricks had provided in support of their use of a comparator ‘high street’ estate agent fee of 1.8% of the sold price of the properties. We had some concerns about the adequacy of the survey as evidence to support the figure of 1.8% in calculating the “Fees saved” claims in the ad.
We noted that Purplebricks had added 20% VAT to the 1.5% average calculated from their customer survey, because they believed it was likely that the quotes respondents had received for commission rates would not have included VAT. However, we noted that because the survey question did not make a distinction between VAT-inclusive and VAT-exclusive quotes, it was not possible to determine whether respondents were referring to VAT-inclusive or -exclusive prices. We therefore concluded the average figure of 1.5% based on the results of the survey, and the 1.8% figure used in Purplebricks’ “Fees Saved” calculations were problematic.
Additionally, we understood that property owners often approached more than one estate agent for a valuation, and to find out the fees they charged, but noted that Purplebricks’ survey did not take into account that respondents may have received a range of quotes.
Furthermore, the survey had been carried out with regard to geographical areas based on Purplebricks’ fee structure of charging £798 on properties outside London and £1,158 on properties within London and the surrounding area. As referenced above, we considered that in the context of testimonials which referred to the specific localities of the featured properties, consumers would expect the “Fees saved” claims to be based on fees charged by estate agents in the specified areas, rather than on an average calculated from the broad geographical areas defined by Purplebricks.
With regard to the additional sources which Purplebricks considered supported the findings of their survey, we noted that we had previously concluded that the Which? survey and information from the conveyancing firm were not adequate to support an average commission figure of 1.5–1.8%. We further considered that because we had not seen the source of the figures stated by Citizens Advice and YourMoney.com, they were not adequate evidence in support of Purplebricks’ average commission figure of 1.8% including VAT.
In the absence of information in the ad about the basis for the savings claims, including the type of estate agents against which the “Fees Saved” comparison was being made, the differences between the services offered by Purplebricks and the comparator estate agents, and because the evidence was not adequate to support an assumed comparator fee of 1.8% of the sold price of a property, we concluded the “Fees Saved” claims in the ad were misleading to consumers and had not been substantiated.
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), 3.7 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) and 3.33 3.33 Marketing communications that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, the consumer about either the advertised product or the competing product. (Comparisons with identifiable competitors).
The ad must not appear again in the form complained about. We told Purple Bricks Company Ltd t/a Purplebricks to ensure that ads which made comparisons provided sufficient information about the services being compared to ensure that consumers would not be misled about either the advertised service or the competing service. We also told them to ensure they held adequate evidence to substantiate the basis of comparative claims.