Legal, decent, honest and truthful

Any business that runs an advert is bound by law not to mislead consumers with false claims. Some high-profile electrical retailers have already had their knuckles rapped, so how can you avoid the same fate? Retail expert Adam Bernstein explains

We live in a highly competitive world where trade is no longer confined to traditional markets. But despite this sea-change, one thing has not altered – the need to follow the rules when it comes to advertising.

Consider the recent hullaballoo that Cardiff-based Budd Electrical found itself entangled in at the start of September. The Euronics member was judged by the Advertising Standards Authority (ASA) to have broken its code of practice with a radio advert that said: “Yes, everyone’s going to Budd Electrical! It’s B, U, double D, and we all love a double D, right?” The ASA banned the radio advert for objectifying women, even though Budd Electrical claimed the reference was to Double Diamond beer.

Others have fallen foul of the rules, too. In August, the ASA reprimanded Currys PC World for a second time after it ran misleading adverts for 4K televisions. The firm had encouraged viewers to believe they could watch ultra-high definition broadcasts of the Euro 2016 football championship, when this was not necessarily the case.

The rules

The ASA applies two codes of practice – CAP and BCAP – to regulate non-broadcast and broadcast advertising. But Donald Mee, an associate at Harbottle & Lewis LLP, says that the Consumer Rights Act 2015 (CRA) is also relevant. This sets out consumers’ rights and remedies for defective goods, services and digital content.

Says Mr Mee: “Any public statements made by a retailer about goods – including those in advertising – will be relevant in assessing whether the goods comply with the quality standards set out in the CRA. For services, anything that is said or written to the consumer by the provider about it, or the service, will be deemed to be part of the contract for the service, provided the consumer takes it into account when deciding to enter the contract, or makes any decision about the service after entering into the contract.”

Retailers should also be aware of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). They prohibit any unfair, misleading and/or aggressive commercial practices.

Mr Mee adds: “They also set out 31 ‘blacklisted’ practices that are expressly banned. These include: displaying a quality mark without authorisation; falsely claiming to be a signatory to a code of conduct, and falsely stating that a product will be available for a very limited time in order to obtain an immediate decision.”

Responsibility for enforcement of the CRA and CPR sits with the Competition and Markets Authority (CMA) and Trading Standards.

Activities allowed

Mr Mee advises retailers to review the relevant CAP and BCAP codes (easily found online) when planning any advertising. “Adverts must be identifiable as adverts, not be misleading and not likely to cause harm or serious or widespread offence.”

He explains that the codes set out restrictions depending on whom the advert is targeting and the product being advertised. Particular rules also apply to comparative advertising.

Because the CPRs prohibit unfair, misleading and/or aggressive commercial practices, the ASA will take factors identified in CPRs into account.

The rules make an advert misleading if it is likely to deceive consumers and cause them to take “transactional decisions” they would not otherwise have taken. Mr Mee adds that an advert can mislead not just by including false claims, “but also by omitting to include important information”.

Retailers should also be aware that ASA rules also apply to social media. Adverts and social media posts must be clearly identifiable.

Penalties

Although the ASA cannot impose fines, it does have other sanctions at its disposal. These include publishing its decisions and asking media owners to refuse space for an advertisement until it has been changed. It can also refer the advertiser to Trading Standards or the CMA, who can seek an injunction to prevent the same or similar claims being made in future adverts.

But while some may consider the ASA toothless – it’s not. Mr Mee doesn’t recommend engaging in practices banned under CPRs. He warns: “These are criminal offences punishable by a fine, up to two years in prison, or both.”