Price claims on the website www.carphonewarehouse.com presented the price of a "Pay as you go" handset as "From £59.95 plus £10 top-up". The networks on which the phone was available were presented below, under a tab labelled "Pay as you go". Each network was listed with its accompanying cost, in the format "£59.95 plus £10 top-up".
1. The complainant challenged whether the references to the £10 top-up were misleading, because they did not make clear that the top-up had to be applied to a new SIM card.
2. The ASA challenged whether the price claims for the handset breached the Code, because they were quoted exclusive of a non-optional £10 top-up.
The Carphone Warehouse Ltd stated they were willing to make any necessary changes to bring the ad in line with the Code.
1. They explained that the price claims visible on the page were intended for those customers who wished to purchase a handset with a new SIM card. They said if the customer wished to continue using an existing SIM card, they needed to buy a "pay as you go upgrade" rather than a "pay as you go new connection". Upgrades did not require top-ups to be bought with the handset and the customer was able to keep their existing SIM card. Carphone Warehouse demonstrated that it was possible to navigate to the "upgrades" section of the website via a sidebar on the search results page for handsets. Further, each individual handset page contained tabs labelled "Pay as you go" and "Upgrades"; unless the upgrade option had previously been selected the page would default to the "Pay as you go" option, relevant to those seeking a new SIM card, but the user could switch between the two. Where the "Upgrade" tab was selected, the handset was presented as costing "From £49.95" and text beside the network information stated "You can keep your current tariff and you don't need to top up".
After consideration of the complaint, Carphone Warehouse said they would amend the title of the "Pay as you go" tab to state "Pay as you go (new SIM)". They considered that it would be clear to consumers that the £10 top-up would be applied to the new SIM card, because otherwise the consumer would navigate to the "Upgrades" tab.
2. Carphone Warehouse considered that it would not be possible to include the cost of the non-optional £10 top-up in the handset price for new pay-as-you-go connections, because some customers may want to purchase a top-up of more than £10.
The ASA noted that the non-optional £10 top-up cited on the web page could be applied to the new SIM card supplied with the handset only. We understood that the price claims and top-up charge were in fact only relevant to those consumers seeking to use a new SIM card that would be supplied as part of a package together with the handset, and that where consumers wanted to continue using their existing SIM card they should select the "Upgrades" tab on the web page (or otherwise navigate to that same location). We understood, however, that qualifying criteria could apply to the purchase of an "upgrade" that would limit the ability of some consumers to purchase a new handset from those listed under the "Upgrades" tab.
We considered that it was not clear from the title of the default tab, "Pay as you go", that the options presented related only to new pay-as-you-go connections, and that the accompanying "Upgrades" tab related to pay-as-you-go upgrades for those with existing SIM cards. Further, whilst we welcomed Carphone Warehouse's willingness to amend the title of the "Pay as you go" tab, we noted that it would remain unclear that the £10 top-up charge had to be applied to the new SIM card supplied with the handset. We considered that, in the absence of information to the contrary, consumers would generally expect to be able to choose the phone number, and therefore the SIM card, to which a new top-up was applied. We also considered that the lack of choice in that respect was likely to constitute material information to the consumer, and therefore that the references to the top-up should be qualified with text making clear that it would be applied to the new SIM card. Because they were not, we concluded that the "£10 top-up" claims were misleading.
On that point, the claims 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. (Misleading advertising) and 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).
The CAP Code stipulated that quoted prices must include non-optional fees and charges that applied to all or most buyers. We considered that, in the context of a web page promoting handsets supplied with new pay-as-you-go SIM cards, the £10 top-up was a non-optional charge and therefore should be included within the advertised package price (e.g. "From £69.95 including £10 top-up"). We noted in particular that the price claims were intended to be of relevance to those seeking an entirely new pay-as-you-go connection and that the top-up could only be used with the SIM card supplied as part of that package. We considered that the top-up was an inseparable part of, and derived its value from, the advertised package.
We acknowledged that some customers might wish to purchase further top-up for the new SIM card at the same time as purchasing the package. However, in that case the additional charge would be optional and did not need to be included in the advertised price.
Because the £10 top-up was a non-optional charge that applied to all or most buyers, but its cost was not included in the quoted price of the package, we concluded that the price claims were misleading and in breach of the Code.
On that point, the claims 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 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. and 3.18 3.18 Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. However, VAT-exclusive prices may be given if all those to whom the price claim is clearly addressed pay no VAT or can recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable. (Prices).
The claims must not appear again in their current form. We told The Carphone Warehouse Ltd to make clear that the £10 top-up could be applied to the new SIM card only, and to include its cost in the advertised price of the package.