Background
THIS RULING REPLACES THAT PUBLISHED ON 16 JULY 2014. THE DECISION ON POINT ONE HAS REVERSED, MAKING THE COMPLAINT ‘UPHELD’ ON THAT POINT.
Ad description
A press ad and a website, www.O2.co.uk, for mobile phone contracts provided by O2:
a. The press ad, published in late January and early February 2014, featured images of the iPhone 5c in various colours. Large text stated “Pick the winner iPhone 5c at a price you’ll love £32 tariff, no upfront cost Includes £12 Airtime Plan". Below the images there featured a table titled "Representative example". One column in the table stated "Monthly airtime payment £12", the next column read "Airtime Plan Mar 2014 - Mar 2015 (including 2.7% RPI) £12.31". The final column stated "Airtime Plan Apr 2015 - Mar 2016 £12.31 + RPI to be announced in Feb 2015". Even smaller print below the table included (in bold) "Airtime Plan prices will go up on your March 2014 bill by the Retail Price Index (RPI) rate of inflation (2.7%) and from 2015 will be adjusted on your April bill every year by the RPI rate announced in the preceding February", and (not in bold) “Offer ends 27 February 2014”.
b. The website www.O2.co.uk, also viewed in late January and early February 2014, featured a section titled "Shop". This page featured various images of phones with details about their tariff prices, which included the "iPhone 4s 8GB Tariff £22.00". Clicking on the product details linked to the product page for the phone which gave consumers the option to select their "Airtime plan" and "Phone plan". Text next to an image of the phone stated "On your March 2014 Airtime Plan, prices will be adjusted by 2.7% in line with the RPI rate of inflation announced in January. From 2015, Airtime Plan prices will change every year by the RPI rate of inflation. We'll announce the change in February and it will start from your April bill". Further text underneath this stated "1 Choose an Airtime Plan Pick the option with the right amount of minutes, texts and data for you". There were three options at £22, £17 or £12. On selecting an option, text stated the price was for a "Monthly Airtime Plan". A box on the left of the screen was titled "Representative example". Text within this box stated "£22.00 Monthly airtime payment".
Issue
The ASA received 5 complaints:
1. three complainants, including Which?, objected that ad (a) was misleading, because they believed the headline price was contradicted by the small print regarding the RPI price rise; and
2. two complainants objected that the prices in ad (b) were misleading, because they believed they failed to make clear the RPI price rise to the airtime plans.
Response
1. Telefónica UK Ltd t/a O2 (O2) said they went to extensive lengths to make the Retail Price Index (RPI) price information clear in the ad. They said they believed the ad made it clear that the £32 price included a £12 Airtime Plan. O2 explained that they included a large white box at the bottom of the ad which they believed clearly and prominently explained that the monthly airtime cost at the time of the ad was £12. They said text in this white box also made it clear that the airtime cost after April 2015 would be "£12.31 + RPI to be announced Feb 2015". They noted that RPI might fall instead of rising. O2 said the box was bigger than the price indication in the ad so they believed it prominently stood out on the page. They said this was done deliberately to ensure that it was clear to consumers what the price would be. O2 said they did not believe the details about the price increase contained in the white box contradicted the headline price claim of £32 and they did not believe the ad was misleading about the price changes but actually made them very clear. They said that the ad was no longer published after 5 February 2014 and the offer closed on 27 February, so anyone taking up the offer would certainly pay the lower airtime rate (£12) for the first month. O2 did not believe that Ofcom guidance of October 2013 (which came into effect on 23 January 2014) on mid-contract price rises was relevant, because the guidance related to the whole consumer sales journey, and a summary of key terms at the point of sale would make the position abundantly clear. In any event the ad itself was clear.
2. O2 said the ad, which was their "Shop" webpage, showed the tariff prices for different phones. They explained that due to limited space for qualification detail on this page, they included RPI information, including details about a price rise, on the phone product pages. O2 explained that the RPI information on these pages was included next to the prices and their intention was to make the RPI information very prominent and present next to the price for a mobile tariff. They said a consumer could not have completed the purchasing journey without being presented with clear and prominent information about the price increases. O2 said this information was also asterisked and included small print at the bottom of the page which provided links to even more information about the price changes and RPI generally. They explained that the RPI information, as well as being clear on the product pages, was also flagged on the online basket page before a consumer completed their purchasing journey. O2 believed they went to great lengths to ensure the RPI information was clear on their online shop.
Assessment
1. Upheld
The ASA noted the ad, which occupied a full page of the relevant newspapers, featured prominent text against a colourful background in the main body that stated “£32 tariff ... Includes £12 Airtime Plan". We noted that the claim was not accompanied by any conditional wording, such as “starting price” or “+ RPI”, and it was not linked to the smaller text at the foot of the ad. Therefore, we considered that consumers were likely to understand the claim “£32 tariff…” as absolute and would expect that price to apply for the duration of a typical phone contract.
The “Representative example” in the table at the foot of the ad was printed on the normal grey/white background of the newspaper page, and occupied about 10% of the ad. It stated on the left of the table that the duration of the agreement was 24 months; and at the right end: “Airtime Plan Mar 2014 - Mar 2015 (including 2.7% RPI) £12.31" and “Airtime Plan Apr 2015 - Mar 2016 £12.31 + RPI to be announced in Feb 2015”. The footnote included smaller emboldened text that stated "Airtime Plan prices will go up on your March 2014 bill by the Retail Price Index (RPI) rate of inflation (2.7%) and from 2015 will be adjusted on your April bill every year by the RPI rate announced in the preceding February" and (in unemboldened text) “Offer ends 27 February 2014”. It was therefore a certainty that the monthly tariff would increase in March 2014 by £0.31, one month into the 24 month contract. We understood from O2 that the last time RPI had fallen in a quarter was in autumn 2009, before O2 had contracts tied to RPI, and therefore considered that it was likely the tariff would increase again in April 2015.
Although we acknowledged that the initial RPI increase was small, and any subsequent 2015 increase was also likely to be small (as indeed it was), the consumer telecoms market was highly competitive on price and the ad promoted a specific product and focused on its price. Because the tariff would almost certainly be higher than £32 for 23 months of a 24 month contract, and the text at the foot of the ad was not sign-posted or sufficiently prominent, we considered that the headline claim in isolation was likely to mislead. Further, even when read as a whole, we considered the ad was ambiguous and likely to mislead a significant proportion of consumers because the table and footnote contradicted, rather than clarified, the headline price.
With regard to Ofcom’s guidance on mid-contract price rises, we agreed that it related to the whole consumer sales journey and that what was said at the point of sale was important. But in our view the consumer should not embark on the sales journey with inaccurate or ambiguous information. We noted that the guidance was the outcome of a consultation prompted by consumer concerns, and that it related to marketing as well as what happened at the point of sale. It advised that the price information for tiered prices should be sufficiently prominent and transparent. “Most clearly, this proviso as to prominence and transparency could be met where [providers] market offers, and enter into contract terms, in a way that sets out with equal prominence that the contract price is £X in period 1 and £Y in period 2 (or some other periods).” We took the view that whilst equal prominence might not be required at the advertisement stage, adequate prominence would be, and that was lacking in the ad.
For those reasons, we concluded that ad (a) was likely to mislead.
On that point, ad (a) breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
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),
3.9
3.9
Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify.
(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).
2. Upheld
We considered that, because the monthly price of the contract was likely to be of significant importance to consumers when deciding on a mobile phone contract, the monthly tariff increase within the term of the contract amounted to a significant term, which should be made clear to a consumer. An indication that the price would rise within the term of a contract, was not included on the homepage of the "Shop" section of the website, which included price information for various phones. A consumer would have to click through to a product page to be presented with details of the qualification and any information that the cost of a plan would rise within the term of a contract. We understood that that the RPI information, as well as being clear on the product pages, would also be flagged again on the online basket page before a consumer completed their purchasing journey. However, given the significance of the information, we considered it should have been clearly and prominently presented within the ad, rather than only being present on click through web pages. We therefore concluded that the ad failed to make clear the RPI price rise to the airtime plans and was misleading.
On that point ad (b) breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
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),
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).
Action
We told O2 to ensure that ads offering new contracts did not make headline price claims that were likely to mislead.
