Background
Summary of Council decision:
Three issues were investigated, all of which were Upheld.
Ad description
A website, Instagram account, and X account for Victoria Plum, an online bathroom retailer, seen in December 2023:
a. The homepage of the website www.victoriaplum.com, included text which stated “Since we were founded in 2001, we’ve gone on to become the UK’s online bathroom specialists, serving well over 2 million customers […] For over 2 decades, we’ve remained at the forefront of the UK bathroom industry […] it’s no wonder our customers rate us ‘Excellent’”. Under another section titled “What do our customers think?” text stated “With over 140,000 reviews, our customers on independent review site Trustpilot rate us ‘Excellent’ – a fact we’re very proud of”.
The “About us” page of the website included text that stated “At Victoria Plum, we’re proud to have helped over 2 million customers across the UK […] Founded in 2001, we’ve been at the forefront of online bathroom buying for over 22 years”. Text further down the page, which stated "Update: Business changes 2023", contained a link to another page of the website that outlined changes to the ownership and administration of Victoria Plum.
b. The Instagram account (@victoriaplumuk) bio section included text which stated “At Victoria Plum, we're proud to have helped 2M+ customers achieve their dream bathroom”.
c. The X account (@VictoriaPlumUK) bio section included text which stated “Rated ‘Excellent’ on Trustpilot with 2M+ customers served”.
Issue
Victorian Plumbing Ltd, who understood that AHK Designs Ltd had acquired the right to use the Victoria Plum brand in September 2023, challenged whether the following claims were misleading and could be substantiated:
1. “Since we were founded in 2001”, “For over 2 decades, we’ve remained at the forefront of the UK bathroom industry”, “Founded in 2001” and “we’ve been at the forefront of online bathroom buying for over 22 years” seen in ad (a);
2. “With over 140,000 reviews, our customers on independent review site Trustpilot rate us ‘Excellent’” and “Rated ‘Excellent’ on Trustpilot” seen in ads (a) and (c); and
3. “serving well over 2 million customers”, “we're proud to have helped 2M+ customers”, and “2M+ customers served” seen in ads (a), (b) and (c).
Response
1., 2. & 3. AHK Designs Ltd t/a Victoria Plum said they had entered into an agreement to purchase Victoria Plum Ltd (VPL) on 29 September 2023, via a pre-pack purchase of VPL's business and assets from administrators. They explained that a pre-pack purchase meant that the sale was negotiated and agreed upon by the parties before the insolvent business goes into administration. As such, they said they had continued to trade, uninterrupted, under the Victoria Plum brand since then. AHK believed that the pre-pack purchase mechanism was a standard approach to similar insolvency situations.
Victoria Plum said they had bought VPL as a going concern, and that the purchase had included equipment, stock, vehicles, records, work in progress and intellectual property rights, including the goodwill in the business. However, they clarified that as part of the pre-pack purchase, they did not need to take on VPL’s liabilities unless they elected to do so under the sale contract or of their own volition afterwards.
They said the business was being conducted from the same premises, with mostly the same employees and that they had elected to take on various liabilities and most supplier contracts, to ensure the supply of services. Victoria Plum said they had honoured certain customer contracts entered into prior to their purchase of VPL, on a case-by-case basis, despite not having a legal obligation to do so while administrators continued to deal with the administration of VPL.
Because Victoria Plum believed that the VPL brand they had purchased was effectively the same company, merely with different owners, and because they had continued to trade uninterrupted, they believed they had the right to make the claims identified in the complaint.
Victoria Plum believed the points made in response to issue 1 and the wider longevity claims regarding the brand also applied to their promotion of the Trustpilot TrustScore, and their “customers served” claims.
Victoria Plum said that, as of 11 January 2024, their TrustScore was 4.4 stars, equating to an “Excellent" rating. They said the score included contemporaneous reviews, submitted since their purchase of the business, and a range of reviews, from five- to one-star ratings, and was based on multiple factors such as the age and total number of reviews, with newer reviews being given more weight, and was not a simple average of the submitted reviews. Because Victoria Plum believed it was effectively still the same business, they also thought it was not misleading to refer to the total overall number of customers served during the overall lifetime of the business.
Assessment
1., 2. & 3. Upheld
The ASA considered that consumers would understand the claims “Since we were founded in 2001”, “For over 2 decades, we’ve remained at the forefront of the UK bathroom industry”, “Founded in 2001” and “we’ve been at the forefront of online bathroom buying for over 22 years” seen in ad (a) to mean that the VPL brand had, since being founded in 2001, enjoyed over 22 years of uninterrupted trading from then up until the present day. We considered that the claims would give consumers confidence in dealing with the company that payments would be secure, and orders fulfilled.
Furthermore, we considered that consumers would understand the claims “With over 140,000 reviews, our customers on independent review site Trustpilot rate us ‘Excellent’” seen in ad (a) to mean that Victoria Plum had a proven track record of receiving “excellent” ratings from customers who used Trustpilot. We also considered that consumers would understand the Trustpilot claims in ad (a) within the context of the longevity claims, and would therefore assume that their Trustpilot score had been built up throughout the business’s years of trading, which further helped create an impression of longevity and stability from the brand. Similarly, we considered that consumers would understand the claims “serving well over 2 million customers” and “we're proud to have helped over 2 million customers across the UK”, seen in ad (a), to mean that VPL was an ongoing, established business with a strong, uninterrupted history of serving over 2 million customers.
Ad (b) stated that Victoria Plum had served over “2M+ customers”, and ad (c) contained the claim “Rated ‘Excellent’ on Trustpilot with 2M+ customers served”. We considered consumers would interpret those ads similarly to ad (a); namely, that the Victoria Plum brand was an ongoing well-established business, and that they were rated as “Excellent” on Trustpilot based on a number of reviews since they had been founded.
CAP guidance stated that marketers claiming their business has been established for a specific number of years, or implying that their business had been established for a long time, should hold documentary evidence to substantiate such claims. It noted that a consumer’s transactional decision may be affected by claims that a company was well-established or had a long trading history. It also noted that a company that had bought another existing or liquidated company may want to adopt the brand heritage of the purchased company, by continuing to advertise using the business name as a trading style, and referring to its trading history. That approach was only likely to be acceptable provided that the purchasing business could demonstrate that it had assumed the liabilities of the purchased company, for example by paying its debts and honouring its guarantees.
We understood that VPL had entered into administration on 29 September 2023, and that AHK Designs had entered into an agreement to purchase VPL via a pre-pack purchase of its business and assets from administrators on the same day. We acknowledged Victoria Plum’s claim that they had continued to trade, uninterrupted, under the Victoria Plum brand name since then, and their belief that they had bought the business as a ‘going concern’. We understood the term ‘going concern’ indicated that an organisation would have sufficient funds to pay its obligations (trade creditors, payroll, etc.) as required over at least the following 12 months, and would not appear to be at risk of closing due to insolvency.
We assessed the Joint Administrators’ Statement of Proposals regarding VPL’s administration, which was provided by Victoria Plum. The Statement of Proposals confirmed that, despite an extensive marketing process, no viable offers had been received to purchase VPL as a ‘going concern’, and pay all of its obligations over at least the following 12 months. Rather than purchasing VPL as a ‘going concern’, we understood that AHK Designs purchased a pre-pack sale of VPL’s business and certain assets, which included the intellectual property rights and the “goodwill in the business” – a business’s value built up over time through its good name and reputation. We also noted that aspects of the business, such as staff and premises, had remained the same since the purchase. AHK Designs said they had taken on various liabilities, including supplier contracts, and certain customer contracts, despite not having a legal obligation to do so while administrators continued to deal with the administration of VPL.
However, we were not provided with any supporting evidence which showed that customer contracts entered into prior to VPL entering administration had been honoured. We further noted that the “Business changes” page of the Victoria Plum website stated that the company was not able to fulfil any orders which had been placed prior to its entering into administration, and that they were unable to accept any returns or provide any refunds on goods or orders, including for consumers who had yet to receive their goods. We also noted that VPL was itself still in administration, while the Victoria Plum brand name was being continued by AHK Designs, following their pre-pack purchase.
We considered the fact that the VPL was not purchased as a ‘going concern’ and, therefore, previous customer orders were not fulfilled, and that VPL was still in administration, would have an impact on a consumer’s view of the business and the claims made in the ads regarding the longevity of the VPL brand, its Trustpilot reviews, and the overall total number of customers served.
Furthermore, we considered that the purchase of a business which had been unable to be sold as a ‘going concern’ did not meet the requirements set out in CAP guidance for companies who had bought another existing or liquidated company, and wanted to adopt its brand heritage and refer to its trading history, especially when other aspects of the business had not been taken on by the purchasing company.
In relation to the Trustpilot claims seen in ads (a) and (c), we acknowledged AHK Design’s belief that, because the Victoria Plum Trustpilot score included contemporaneous reviews, and that the Trustpilot system gave greater weight to newer such reviews, it was not simply an average of all submitted reviews and was therefore reflective of customer reviews submitted since their purchase of the business. We noted, however, that filtering Victoria Plum’s Trustpilot score to show only reviews from the last 12 months ? which included five months during which time the brand was not owned by AHK Designs ? showed that just over 10,000 reviews, out of a total of 146,038, had been submitted since April 2023. We therefore considered that the vast majority of the Trustpilot reviews for the Victoria Plum brand related to the original iteration of the business.
They had, therefore, been submitted prior to their entering administration and the subsequent purchase by AHK Designs. Because consumers would expect the Trustpilot score to reflect the overall score of a stable business which had run without interruption since its inception, and because this was not the case, we further considered that the claims regarding the overall Trustpilot score were misleading.
Because we considered that the claims regarding Victoria Plum’s longevity would have an impact on consumer confidence and expectation, and because VPL had actually gone into administration and previous consumer orders had not been fulfilled, we considered that the impression created by the claims, of an ongoing business that had served over 2 million customers and attained an “Excellent” Trustpilot score over the course of an uninterrupted trading history, were misleading.We therefore concluded that the claims regarding the longevity of the business, the number of customers served and the Trustpilot score seen in ads had not been substantiated, and were misleading.
The ads breached CAP Code (Edition 12) rules 3.1 (Misleading Advertising) and 3.7 (Substantiation).
Action
The ads must not appear again in their current form. We told AHK Designs Ltd t/a Victoria Plum to ensure that any claims they made regarding the longevity of the Victoria Plum brand, the customer reviews of the brand, and the total number of customers served by the brand in its current form were not misleading and were capable of substantiation.
