The website for the Carphone Warehouse, www.carphonewarehouse.com, advertised the Samsung Galaxy S4 Mini phone. A column headed "Phone cost" described the phone as "FREE" on Vodafone and T-Mobile 24-month tariffs. The T-Mobile cost was "£27 per month" and the Vodafone cost was "£25 per month".
The complainant, who believed that the cost of the handset was included in the monthly contract price and that equivalent SIM-only plans were cheaper, challenged whether the 'free' claim was misleading.
The Carphone Warehouse Ltd said they were mindful of their duty not to mislead consumers by labelling a handset as free when it was in fact taken into account in the pricing of the tariff, i.e. inclusive. They said that they had therefore established an internal process to offer each tariff for sale on a SIM-only basis (i.e. supplied without a handset) at exactly the same price as when sold with a handset. They provided a screenshot of the tariff in question being offered at the same price on a SIM-only basis as when sold with the Samsung Galaxy S4 Mini handset. They said the two tariffs that the complainant had referred to, and believed equivalent, had different tariff inclusions to that advertised with the handset and so could not be compared to that in the ad.
They believed their description of the phones as "free" complied with the Code because it was a conditional purchase promotion and the paid-for items (the "tariff" - made up of inclusive call minutes, texts and data allowance) could be bought without the free item (the phone) if preferred, and had a genuine stand-alone price. They said the tariff could be bought either without a phone, or with various different "free" phones, all with the tariff at the same price. They did not believe they needed to supply data regarding the number of people who purchased the tariff without a phone, and that they merely needed to present the option to purchase the tariff without the phone to consumers to comply with the Code. They said that in practice very few consumers were likely to purchase the tariff without taking a free phone, and that their sales consultants would encourage consumers to take the free handset so they got more for their money.
The ASA understood that in the case of both the Vodafone and T-Mobile tariffs with which a "free" phone was offered, the same tariff was sold on a SIM-only basis for the same price on the same 24-month contract. However, Carphone Warehouse had declined to provide data regarding how many people purchased the SIM-only tariff in comparison with those who purchased the tariff with a "free" phone. We noted that the "Pay Monthly SIMs" home page listed only one-month and 12-month contract lengths and did not promote 24-month contracts, and considered that in general consumers would view a shorter contract length as a superior product, which was reflected by the fact that the one-month SIM-only tariffs were a higher price than 12-month SIM-only tariffs when offering the same minutes, texts and data allowance. Although the 24-month contracts for both the T-Mobile and Vodafone tariffs in the ad were listed on the Carphone Warehouse website, they were only viewable when clicking "View all [provider] SIM only deals", in contrast with one-month and 12-month contract lengths.
The Carphone Warehouse said the "free" phone offer was a conditional purchase offer and that the tariff itself could be purchased without the phone and had a genuine stand-alone price. The T-Mobile tariff cost £27 with a "free" phone. Although the same 24-month tariff was available on a SIM-only basis we noted that tariffs that included more minutes and the same number of texts and data allowance as in the ad were available for £23 per month on a one-month SIM-only contract, and £21 on a 12-month SIM-only contract. We considered that consumers were likely to regard these as superior tariffs because they were offered on a shorter contract period and included a greater number of minutes. We considered that the cheaper superior SIM-only tariffs demonstrated that the £27 per month cost indicated in the ad included the cost of the phone and that £27 was not a genuine stand-alone price for the tariff. We also noted we had not seen evidence that the 24-month SIM-only tariff was actually purchased by consumers.
The Vodafone tariff cost £25 with a "free" phone. Although the same 24-month tariff was available on a SIM-only basis, we noted that the tariff was not available on the same SIM type that the "free" phone required, which we considered was a material difference because it affected what make and model of phone it could be used with. We also noted that other SIM-only deals available on the same SIM type as the "free" phone, offered equivalent or better minutes, minutes and data allowance on one- and 12-month contracts, although we acknowledged that none of the cheaper SIM-only deals included the 1 GB of Wi-Fi that was included with the advertised tariff. We considered that the cheaper similar SIM-only tariffs, and the fact the direct equivalent SIM-only tariff was not available on the same SIM-type as the "free phone", demonstrated that the £25 per month cost in the ad included the cost of the phone. Therefore, £25 was not a genuine stand-alone price for the tariff. We also noted we had not seen evidence that the 24-month SIM-only tariff was actually purchased by consumers.
We concluded that the claims the phone was "free" were misleading.
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 3.25 3.25 Marketers must not describe an element of a package as "free" if that element is included in the package price unless consumers are likely to regard it as an additional benefit because it has recently been added to the package without increasing its price. (Free).
The ad must not appear again in its current form. We told the Carphone Warehouse to ensure that where the cost of a phone was included in the package price it was described as "inclusive" rather than "free".