Background
Summary of Council decision:
Two issues were investigated, both were Upheld.
Ad description
An e-mail and a website, www.shebang.net, promoted a mobile phone network provider.
a. The e-mail, stated "100% Guaranteed FREE Pay Monthly handset! We are the only network in the UK to offer a 100% guaranteed pass to every single customer! Apply online today to choose your price plan".
Further text under the heading "Pay Monthly mobile phones" stated "Shebang Network 100% guarantees a FREE mobile phone to every single customer that applies, even if you have poor credit history or have been turned down in the past! Check out some of our most popular phones or view our full range by clicking above". Below that, there were images of three mobile phone handsets, accompanied by text which stated "Sony Xperia U Black Available from Core 300 £20.00 per month ... 12 month add-on £10.00 pm ... 24 month add-on £5.00 pm ... £25.00 per month", "HTC One V Black Available from Super 600 £25.00 per month ... 12 month add-on N/A ... 24 month add-on £8.00 pm ... £33.00 per month", and "Samsung Galaxy S III White Available from Super 600 £25.00 per month ... 12 month add-on N/A ... 24 month add-on £15.00 pm ... £40.00 per month".
b. On the web page entitled "Free Guaranteed Handset" headline text stated "100% Guaranteed FREE handset for everyone!" and appeared next to an image of an HTC One V Black handset and an image of a Samsung Galaxy III White handset.
Further text stated "Although we can't be sure you will get a handset from the point of connection, we do guarantee that you will be able to receive a brand new network approved handset within a very short time". The page also included text which explained how consumers with different credit scores would be able to secure their free handset. Under the heading "Average / Low score" text stated "If your credit check is average or low then you will be offered a SIM Only contract and your choice of price plan on your selected length of contract ... This does mean that you can't have your handset at the point of sale, however after connecting to our network, you will then be able to receive your handset by completing one of the following actions: Pay the relevant deposit required ... (you may have additional monthly charges applied from that point, depending on the handset, and you may need to extend your contract length) ... Your deposit will be credited back to your network bill after only 6 month's [sic] ... or Wait a short time until your bill payments have achieved enough spend to qualify for your handset of choice to be released (you may have additional monthly charges applied from that point, depending on the handset, and you may need to extend your contract length) ... You can order your handset at any time when either points 1 or 2 are achieved for the handset of your choice".
Issue
The complainant challenged whether the use of "free" in:
1. ad (a); and
2. ad (b) was misleading.
Response
1. & 2. Shebang Technologies Group Ltd (Shebang) stated that they offered all customers a Nokia C2-01 handset for free on a 24-month contract on the Shebang network. They provided screenshots from their website which stated that the handset was available for free on a number of different price plans. They highlighted, however, that although they could not ensure that every customer would get their free handset from the point of connection to the network, they did guarantee that every customer would receive a handset within a short amount of time, but that was dependent on their credit rating.
They highlighted that, as set out on the web page entitled "Free Guaranteed Handset" and in their terms and conditions, individuals with an average or low credit rating were still able to secure a free phone but first they had to either pay a deposit, which would be credited back to their network bill, or wait until their bill payments had achieved enough spend to qualify for their handset to be released.
Shebang stated that they were constantly updating and improving the advertising on their website to ensure that consumers fully understood the contracts they offered. They asserted that their advertising was no different from their competitors who also offered free handsets to consumers who signed up to a monthly line rental for a contractual period of time. They also explained that the qualifications which applied to the offer were clearly set out in their terms and conditions which consumers could easily locate. In particular, they highlighted that ad (a) contained a number of links which directed consumers to their website where they could read the full terms and conditions.
Assessment
1. Upheld
The ASA understood that if a consumer signed up for a 24-month contract on the Shebang network, on certain price plans, they could secure a Nokia C2-01 handset at no additional cost. For example, a consumer could sign up for a 24-month contract on the "Primary 50" price plan which included 50 minutes, 500 texts and 50 Mb data, for £10.00 per month, and if they also chose to apply for a Nokia C2-01 handset, they would not be charged a "handset add-on" fee, but would still pay £10.00 per month.
We understood, however, that if a customer's credit rating was low or average they would initially have to sign up for a SIM-only contract and either pay a deposit of £50, which would be credited back to their network bill after six months, or wait until their network bill spend totalled £50, before they could claim their free Nokia handset.
We therefore understood that a number of significant conditions applied to the claim "100% Guaranteed FREE Pay Monthly handset"; namely that the offer applied only to the Nokia C2-01 handset, that a consumer had to sign up for a 24-month contract on one of several specific price plans, and that if they had a bad or average credit rating then they would have to pay a deposit or wait until their network spend totalled £50, before they were entitled to a free phone. We noted, however, that the claim appeared unqualified in the e-mail and therefore consumers would not be aware of the conditions which applied to the offer until they had clicked through to the Shebang website and read the information on the "Free Guaranteed Handset", and the relevant phone and price plan web pages.
In addition, we considered that the e-mail misleadingly implied that a number of different handsets were available for free on the Shebang network. We considered that the claim "Shebang Network 100% guarantees a FREE mobile phone to every single customer that applies ... Check out some of our most popular phones or view our full range", suggested that a number of different handsets were included in the offer. Similarly, we considered that the images and price information which appeared below that text suggested those handsets could be secured for free. In particular, we noted that text stated "x month add-on" rather than explicitly stating "x month handset add-on", and that for both the HTC and Samsung handsets, the price of a 12-month add-on was stated as "N/A". We considered that most consumers would understand "N/A" to mean "not applicable", and therefore believe that those specific handsets were included in the free offer. We noted, however, that on the Shebang website those handsets were not available for free but were instead listed as "Unavailable on 12 month plans".
We noted that if a consumer had a bad or average credit rating, they would not be able to claim a free Nokia C2-01 handset immediately, but would either have to sign-up for a SIM-only contract until they had spent £50 on their network bill (and ensure they fulfilled all the other conditions attached to the offer), or pay a £50 deposit which would be refunded to them after six months. We noted that, if such a consumer opted for SIM-only contract, they would not spend any additional money to acquire the Nokia C2-01 handset once they had paid a sufficient number of their monthly payments on time. Therefore, if a consumer purchased a 24-month SIM-only contract on the "Primary 50" price plan, costing £10.00 per month, after five months they would be entitled to a free handset and their monthly payments would not increase. We therefore considered that Shebang could legitimately describe the Nokia handset as free in those circumstances.
In contrast, we considered the fact that some consumers had to pay a deposit to secure a free handset was contradictory to most consumers' understanding of the claim "free". We noted that an individual who chose to pay a deposit would have to make an upfront cost of £50 to secure their handset, and that when the deposit was returned to them after six months it would be credited to their network bill rather than their bank account or returned as a cheque, so they could not spend it at their discretion. We therefore considered that it was misleading to describe a handset as free for those consumers that chose to pay a deposit to secure it.
We noted that a number of significant conditions applied to the offer of a free handset but that those were not communicated in the e-mail and that the ad misleadingly implied that a number of handsets were included in the offer. In addition, we considered that it was misleading for Shebang to describe a handset as free for those customers who paid a deposit to release it. We therefore considered that the use of free in the e-mail was misleading and concluded that it was in breach of the Code.
The email breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
(Misleading advertising),
3.9
3.9
Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify.
3.10
3.10
Qualifications must be presented clearly.
CAP has published a Help Note on Claims that Require Qualification.
(Qualification) 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).
2. Upheld
We considered that the claim "100% Guaranteed Free handset for everyone", as it appeared on the "Free Guaranteed Handset" web page, was qualified in part by the text underneath. We noted that that text set out the conditions which applied to the offer for individuals with a low or average credit score, but that there was no information explaining that the offer only applied to 24-month contracts and particular price plans. The page also did not state that customers could only claim a free Nokia C2-01 handset and that an "add-on" charge was applied if a customer wanted a more advanced handset. We considered, however, that claims such as "If your credit check is of a high score you will be able to choose from any of the packages available, including a huge range of handsets", and the images of an HTC One V Black and a Samsung Galaxy S III White implied that a number of handsets were included in the offer. Whilst we acknowledged that text on the page stated "you may have additional monthly charges applied from that point, depending on your handset ...", we considered that text did not sufficiently clarify the offer, and that the average consumer would mistakenly believe that a number of handsets were included in the offer.
In addition, as set out in point 1 of the assessment, we considered the fact that some consumers had to pay a deposit to secure their handset contradicted the claim "100% Guaranteed Free handset for everyone".
We therefore considered that the claim "100% Guaranteed FREE Pay Monthly handset", was not qualified appropriately, and in the context of the web page implied that a number of different handsets were available for free. We also considered that the handset could not legitimately be described as free for those customers who paid a deposit to secure their handset. We therefore concluded that the "free" claims throughout the web page were misleading and were in breach of the Code.
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),
3.9
3.9
Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify.
3.10
3.10
Qualifications must be presented clearly.
CAP has published a Help Note on Claims that Require Qualification.
(Qualification) 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).
Action
The ads must not appear again in their current form. We told Shebang to ensure they stated all the significant conditions which applied to an offer in future. We also told them to ensure they did not misleadingly imply that particular handsets were included in an offer and to not claim that an item was "free", if that was not the case.
