Background
Summary of Council decision:
Four issues were investigated, all of which were Upheld.
Ad description
A website and a paid-for search result on Google for the pay-per-bid auction site liklebid:
a. The home page of the website www.liklebid.com, seen on 30 July 2016, contained text which stated "On average our members receive 96% discount!" and "Our members purchase desirable items for a fraction of their RRP by bidding in likleBID's lowest unique bid auctions. Join & Bid for Free today". Further text stated "STEP 1 - JOIN FOR FREE! - GET 5 FREE BIDS - STEP 2 - PLACE SMART likleBIDS - STEP 3 - PAY liklePRICES".
Other pages invited bids for various items and made savings claims against RRPs (recommended retail prices). One page showed a chocolate fountain with text which stated "RRP £37.99". Another page showed an Apple watch with text that stated "RRP £299".
b. A paid-for search result on Google stated "New Products Upto [sic] 95% Off ... www.liklebid.com ...".
Issue
The ASA challenged whether:
1. the RRP claims in ad (a) were misleading and could be substantiated;
2. the claims "on average our members receive 96% discount" in ad (a) and "new products up to 95% off" in ad (b) were misleading and could be substantiated;
3. the "sold" prices in ad (a) were misleading, because they did not include the cost of bids; and
4. ad (a) was misleading, because it did not make clear before registration that there was a cost attached to each bid and to the credit packages used for purchase.
Response
1. liklebid supplied a screenshot from another retailer's website which showed the same model of chocolate fountain priced at £26.99, with text that stated "£37.99 RRP" underneath that price. For the Apple watch, they supplied a pre-launch BBC news item which stated "Apple's smartwatch collection will range in price from $349 to $17,000 (£299 to £13,500 in the UK) ...".
2. liklebid supplied details of bidders and prices paid, which showed that 27 out of 48 successful bidders had saved over 98% in comparison with what liklebid considered to be the "RRP" for their items.
3. & 4. liklebid supplied details of the joining process which showed that participants received free bids when they registered. They supplied details of how participants paid for bids, but said they did not need to pay for bids if they did not want to. liklebid supplied a breakdown of costs for their last four successful bidders. Three had used bonus or free bids, which liklebid argued had had no cost attached for the bidders and so did not impact on the savings claim, and that they paid nothing more than the closing price. The fourth bidder had used a combination of free and paid-for bids.
Assessment
1. Upheld
The ASA considered consumers would understand the quoted RRPs to represent the prices at which the products were generally sold by other retailers. In the example of the retailer's website that liklebid had supplied, the retailer was advertising the chocolate fountain at £26.99, not the £37.99 price claimed as the RRP. We considered that one example, in which the item was being advertised at a lower price, did not demonstrate that it was generally sold at £37.99. With the Apple watch, we considered that a price stated in a pre-launch news item did not demonstrate that the item was generally sold at that price. In the absence of any substantiation demonstrating that the stated RRPs represented the prices at which the relevant products were generally sold, we concluded that the savings claims were likely to mislead.
On that point ad (a) breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation), 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. (Prices) and 3.40 3.40 Price comparisons must not mislead by falsely claiming a price advantage. Comparisons with a recommended retail prices (RRPs) are likely to mislead if the RRP differs significantly from the price at which the product or service is generally sold. (Price comparisons).
2. Upheld
We considered consumers would interpret the claim in ad (a) to mean that, on average, they would receive approximately 96% discount off the price at which the products were generally sold by other retailers. We considered they would interpret the claim in ad (b) to mean that all the products had a discount off the price at which they were generally sold by other retailers, with a significant proportion being discounted by 95%. Therefore, we considered liklebid needed to demonstrate that the prices paid by successful bidders, including the cost of bids, were in line with those interpretations. As explained in point 1 above, we considered that liklebid were not able to demonstrate that the claimed RRPs used in their price comparisons represented the prices at which the promoted items were generally sold or, consequently, that the prices paid by members, including the cost of bids, represented a discount of the amount claimed from those prices. Because of that, we concluded that the average 96% and up to 95% savings claims were likely to mislead.
On that point ads (a) and (b) breached CAP Code (Edition 12) rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation. (Substantiation), 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. (Prices) and 3.40 3.40 Price comparisons must not mislead by falsely claiming a price advantage. Comparisons with a recommended retail prices (RRPs) are likely to mislead if the RRP differs significantly from the price at which the product or service is generally sold. (Price comparisons).
3. Upheld
We considered consumers would interpret the "sold" prices as representing the total amount that a successful bidder had paid to secure the item in question, and that they would have a reasonable chance of making comparable savings if purchasing that item, or similar, in future. We understood that there were ways in which participants could obtain bids free of charge and that, for them, the additional cost of purchasing bids would not impact on any savings they might make. However, for participants who did not bid with free bids and who instead had paid for bids, the "sold" prices did not take into account that additional cost, which would reduce any saving those participants were able to achieve. Because the "sold" price would not always reflect the full cost borne by the bidder, we concluded that the "sold" prices were likely to mislead.
On that point ad (a) breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
3.3
3.3
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),
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.
(Prices) and
3.40
3.40
Price comparisons must not mislead by falsely claiming a price advantage. Comparisons with a recommended retail prices (RRPs) are likely to mislead if the RRP differs significantly from the price at which the product or service is generally sold.
(Price comparisons).
4. Upheld
We noted that the home page contained several references to membership such as the text "JOIN FOR FREE!" and "On average our members receive ...". We considered, therefore, that consumers would understand that they were likely to need to become members before they could place a bid on the site. We noted that one of the answers to the Frequently Asked Questions, which could be accessed via the home page, referred to the purchase of additional bids, which suggested additional costs might be payable. However, another answer, to the question "If I win how much do I have to pay?", stated that, for successful bidders, "... all you then have to pay is the lowest unique bid value. No additional delivery charge to UK residents. No hidden administrative fee". The "Buy Credit" page stated the cost of purchasing various bid packages, but was only accessible after members had registered their details. We acknowledged that liklebid's terms and conditions, a link to which appeared at the bottom of the page, referred to payment of weekly, fortnightly or monthly subscription fees, but we considered that information was likely to be missed, because it appeared on a separate page amongst a large amount of detailed text that dealt with various other topics. We considered therefore that the information available to consumers before they registered their details of additional costs was ambiguous, and meant consumers were unlikely to understand that they might need to pay a subscription fee and purchase bids in order to take part in an auction. Because the ad did not make that clear, we concluded that it was misleading.
On that point ad (a) breached CAP Code (Edition 12) rules
3.1
3.1
Marketing communications must not materially mislead or be likely to do so.
and
3.3
3.3
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).
Action
The ads must not appear again in its current form. We told liklebid to ensure they held adequate substantiation for price savings claims made against RRPs in future; to ensure that "sold" prices included the cost of bids (or explained how their cost would be calculated if the cost could not be calculated in advance); and to ensure their ads made those and any other additional costs, and how they were calculated, clear before registration.
