Ad description
A Google sponsored search result for a web-hosting company featured text that stated, “123-reg Web Domain Names - Get Your .co.uk For Only 0.99p … Choose the UK Domain Name Experts - .CO.UK Domain 99p - .UK Domain 99p … Web Hosting Only £2.49/m …”.
Issue
The complainant, who understood that all the price statements did not include VAT, challenged whether that had been made sufficiently clear in the ad.
Response
123-Reg Ltd stated that it was standard practice for domain name companies to quote VAT-exclusive prices as the majority of customers used the service for business purposes. They believed that it would confuse the majority of their customers if they were to advertise different prices to a retail market that they did not serve, particularly because this was uncommon in the domain name industry. They provided examples of their competitors advertising. They believed that if they were the only domain name provider within the UK to display VAT inclusive prices, it would put them at an unfair disadvantage.
Assessment
Upheld
The CAP Code stated that quoted prices must include non-optional taxes, duties, fees and charges that applied to all or most buyers. However, VAT-exclusive prices could be given if all those to whom the price claim was clearly addressed paid no VAT or could recover VAT. Such VAT-exclusive prices must be accompanied by a prominent statement of the amount or rate of VAT payable.
The ASA considered that the majority of consumers who purchased a domain name were businesses and likely to be able to recover VAT. We therefore considered that it was acceptable for 123-Reg to use VAT-exclusive prices in the ad.
However, we noted that the price statements in the ad were not clearly addressed to those who paid no VAT or could recover VAT as required by the CAP Code, for example, by stating “business price” or “trade price”.
We also noted that the price statements were not accompanied by a prominent statement of the amount or rate of VAT payable, as also required by the Code.
Therefore, because we considered that the price statements were not clearly addressed to those who paid no VAT or could recover VAT and had not been accompanied by a prominent statement or rate of VAT payable, we concluded that they were misleading.
The ad breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising) and 3.17 and 3.18 (Prices).
Action
The ad must not appear again in its current form. We told 123-Reg Ltd to ensure that their VAT-exclusive prices were clearly addressed to those who paid no VAT or could recover VAT, and to ensure that such VAT-exclusive prices were accompanied by a prominent statement of the amount or rate of VAT payable.
