Summary of Council decision:
Three issues were investigated, all of which were Upheld.
The O2 website and YouTube, seen on 4 July 2019, promoted their O2 refresh campaign:
a. The first ad, on the O2 home page, showed large text which stated, “Ouch!” in a stylised font to mimic thorns. Smaller text left of the headline stated, “Are you paying for a phone you already own?”. Text directly below stated, “Other networks charge you for a phone you already own. With a custom plan from O2, we won’t”. Underneath these headlines was a widget overpayment estimator which allowed users to input details including “Which network are you on?”. Text to the left of the calculator stated, “See if you’re overpaying. Already have a custom plan with O2? Then you’ve got nothing to worry about…If you’re not on O2, you could be paying for a phone you already own. Think you’ve been stung? Enter your details to see if your network provider has been overcharging you”. An illustrative example produced results which stated, “Ouch! ... If you’re not on O2, you could have overpaid your network provider by …”.
At the bottom of the page, smaller text stated, “Estimator calculations based on SIM free device price sales data…Handset value taken is sales price for the device on its own ... Other network operators offering bundled handset and airtime pay monthly contracts which don’t automatically drop the price to just airtime after 24 months include Vodafone, EE, Three”.
b. The second ad, on YouTube, showed different cars unable to exit a car park and appearing frustrated. On-screen text stated, “Would you keep paying for something you’ve already paid for”. A CCTV style camera angle showed the characters paying for their tickets at the machines. When the ticket was inserted in the machine to exit, an automated voice stated, “Please make another payment”. One man questioned, “Why would I make another payment.” The attendant replied, “We just want you to keep paying” and in another shot stated, “[T]he payments just go on and on and on.”
Large on-screen text stated, “Ouch!” in a stylised thorn font. Further on-screen text stated, “other networks charge you for a phone you already own”. The final on-screen text stated, “With a custom plan from O2 we won’t”. Limitations were shown with small on-screen text which stated, “Bundled mobile phone & airtime contracts which continue beyond min term without dropping in price mean you could continue paying for a phone you’ve already paid for until you upgrade or leave” with further on-screen text which stated, “With custom plans as soon as you’ve paid off your device you will automatically just pay your Airtime Plan. O2 Refresh credit by Telefonica UK Ltd, eligibility & terms apply”.
IssueThe ASA received complaints from Virgin Media and Hutchinson 3G UK Ltd t/a Three. Three challenged whether: 1. ad (a) was misleading by not making clear what was being compared; and 2. ad (a) was misleading because the results of the calculator did not reflect the actual costs charged by Three and other networks. 3. Virgin Media, who said that Virgin and Sky also offered custom plans, challenged whether the claim in ad (b) “other networks charge you for a phone you already own – but with a custom plan from O2 we won’t” was misleading by suggesting that all other networks did not offer custom plans.
Response1. Telefonica UK Ltd t/a O2 said that the comparison made between O2 Refresh and competitors standard bundled contracts was a like-for-like comparison. They said the comparison compared products which met the same need, to provide customers with a mobile device and network, and were intended for the same purpose of communication. O2 referred to the Ofcom consultation, “Helping consumers to get better deals in communications markets: mobile handsets”. O2 also argued that an averagely informed customer was capable of understanding the context of the claim. They also believed that the calculator made it clear to consumers that the figures in the estimator were illustrative and that they had provided consumers with information about the parameters of the calculator. 2. O2 said the ad did not say that Three charged customers more than the sums they agreed to pay under their contract. O2 also stated that they had not made claims in relation to the overall package that Three sold. O2 said that the ads focused on the fact that at the point the customer had reached the final month of the fixed term of their bundled contract they have paid for their phone and own it, but continue to pay the same amount which could amount to overpaying. They stated that charges continued until the contract was cancelled which required proactive conduct from the customer. O2 believed that the estimator was clear that customers “could be overpaying by £xx” because they were not able to know the specific value attributable to a phone provided by any operator. O2 stated that they had made the comparison based only on objectively available information as any other consumer would do. 3. O2 said the claim did not suggest that O2 was the only provider that offered “custom plan” contracts but instead that other networks charged customers for the phone they already owned through standard bundled contracts. O2 also said that the on-screen text “See if you’re overpaying O2.co.uk/ouch” invited customers to view Ouch! O2 terms and conditions and check how much they might have overpaid.
Assessment1. Upheld We considered that consumers viewing the ad were likely to be customers on other networks interested in switching to O2, and would interpret the headline claim “Are you paying for a phone you already own?” and the text beneath: “Other networks charge you for a phone you already own. With a custom plan from O2, we won’t” to mean that other networks structured their charges such that they continued to charge customers for phones for which they had already paid but that O2 did not. We understood that the calculator compared bundled contracts from other networks, where customers paid a single monthly sum which covered both device and network tariff costs, with the O2 custom plan, where customers paid two separate sums each month: one for device costs and another for network tariff costs. We understood that the O2 custom plan was an ‘unbundled’ plan where consumers paid a separate cost for a device and after the device was paid for, the consumer would only pay the network tariff cost. We understood that other networks also offered versions of their own ‘unbundled’ plans, where they would not “charge you for a phone you already own”, but those plans were excluded from the calculator. Conversely, we also understood that O2 offered bundled contracts (through indirect channels with Carphone Warehouse) which were also not included in the calculator. We noted the explanatory wording underneath the calculator which stated that the calculator had used competitor bundled contract costs. We also noted the ad stated at various points that those costs were being compared with an “O2 custom plan”. However, we did not consider that those references were sufficient to make clear that the calculator would take the costs of an ongoing bundled contract and compare them only with unbundled contract costs rather than bundled contracts. Furthermore, the ad did not state that O2 also operated bundled contracts and that competitors offered unbundled contracts. Because the ad implied that O2’s competitors only offered bundled plans and that only O2 offered unbundled plans, when neither of those things were the case, we concluded that the ad was misleading. On that point ad (a) breached CAP Code (Edition 12) rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. & 3.3 3.3 For advertisements that quote prices for an advertised product or service, material information [for the purposes of rule 3.2] includes: (Misleading advertising) 3.9 3.9 Broadcasters must hold documentary evidence to prove claims that the audience is 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. & 3.10 3.10 Advertisements must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify. (Qualification) 3.33 3.33 Advertisements that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, consumers about either the advertised product or service or the competing product or service. (Comparisons with identifiable competitors). 2. Upheld The ASA considered that consumers would expect the output from the calculator to be an objective calculation based on exact figures. We understood that the calculator purported to show consumers how much they could have overpaid on O2’s competitors’ bundled contracts which had continued after their contract expiry date. However, O2 stated that the calculations were based on competitors’ average sale price of the devices purchased outright from the networks rather than the actual costs attributed to the device in the bundled contract; they did not know the precise cost of devices and the network tariff cost in other network’s bundled contracts. Although the qualification below the calculator explained that the calculations were estimates, we considered it was not sufficient to override the overall impression of the ad, that the calculator was based on exact figures rather than speculative amounts. We therefore concluded that the ad was misleading as did not reflect the actual costs charged by the other networks. On that point ad (a) breached CAP Code (Edition 12) rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. & 3.3 3.3 For advertisements that quote prices for an advertised product or service, material information [for the purposes of rule 3.2] includes: (Misleading advertising), 3.7 3.7 Advertisements must not falsely imply that the advertiser is acting as a consumer or for purposes outside its trade, business, craft or profession. Advertisements must make clear their commercial intent, if that is not obvious from the context. (Substantiation) 3.17 3.17 Advertisements must not explicitly claim that the advertiser's job or livelihood is in jeopardy if consumers do not buy the advertised product or service. (Prices). 3. Upheld The ASA considered that consumers would interpret the claim in ad (b) that “other networks charge you for a phone you already own – but with a custom plan from O2 we won’t” to mean that other networks did not offer unbundled plans and that O2 was the only network where they could ensure they would not be charged for a phone they already owned. However, we understood that other networks also offered unbundled plans in addition to the bundled contracts which O2 suggested “charge you for a phone you already own”. We therefore considered that the ad was misleading. On that point ad (b) breached CAP Code (Edition 12) rules 3.1 3.1 Advertisements must not materially mislead or be likely to do so. (Misleading advertising).
The ads must not appear in their current form. We told Telefonica UK Ltd t/a O2 to ensure that their advertising did not suggest that they were the only provider that offered unbundled contracts or that they did not offer bundled contracts. We also told them not to compare the costs of bundled contracts with unbundled contracts unless they made the nature of that comparison clear. We also told them not to make comparative claims based on speculative figures and not to imply that other networks did not offer unbundled plans.