Background
Summary of Council decision:
Two issues were investigated, both of which were Upheld.
Ad description
A website and TV ad for HouseSimple Ltd, an online estate agent:
a. The website www.housesimple.com, seen in February 2017, stated on its “Estate Agent Fees explained” page that “High street estate agent fees are usually worked out as a percentage of the final sale price of your property. This can range from 1.5% to 4% (plus 20% VAT - which often isn't clearly highlighted as an extra cost), adding up to an average bill of £5,247” and that online estate agents were “much cheaper”.
b. A TV ad, seen on 14 March 2017, stated in the voice-over that “Get an expert evaluation, professional photos and floor plans … just like a traditional estate agent … but the big difference, HouseSimple customers saved on average £5,000 in fees.” Text at the bottom of the screen stated “Based on responses of 391 previous HouseSimple customers surveyed.”
Issue
The ASA received two complaints:
1. One complainant, who believed that the average estate agent fee was 1.3%, challenged whether the claim “1.5% to 4%” in ad (a) was misleading and could be substantiated.
2. Both complainants challenged whether the savings claims in ads (a) and (b) were misleading and could be substantiated.
Response
1. HouseSimple Ltd said that the claim that high street estate agents’ fees were within the range “1.5 to 4%” was based on a Home Owners Alliance article which referred to a mystery shop of estate agent fees and a 2011 survey by Which?. They also provided two surveys (sent in May 2016 and in December 2016) of customers who had used their service. They said that of those who had been quoted commission from a high street estate agent, the average generally was in line with what had been quoted in the article. They said that the web page in question and the claim “1.5% to 4%” was not, however, related to their current advertised savings claims and was an old article. They said they had now updated the figure.
2. HouseSimple and Clearcast said that the savings claims were based on a survey that HouseSimple carried out of 391 of their customers in May 2016 who had received a quote from a high street estate agent before switching to HouseSimple and had sold their house with them. The survey calculated the average savings that customers would make by comparing the difference between the eventual sale price of their property with their estimated high street estate agent commission subtracted and the sale price of the property with HouseSimple’s fees subtracted. HouseSimple said they were not claiming that everyone would sell that amount, but that previous customers had saved that amount on average based on their historic customer survey. They said the May 2016 survey request was sent to 4403 customers who had sold a property with them between Jan 2015 and April 2016. It was sent again in December 2016 to 2816 customers that had sold between 1 Jan 2016 and the date of the survey which was 29 December 2016. They provided a copy of the email survey, which asked one question asking for the percentage of the value of their property which was quoted by other estate agents before they signed up with HouseSimple. They did not consider it was relevant that people might seek more than one quote, because the survey did not influence respondents to provide a higher or lower quoted percentage.
In relation to the claim “much cheaper” they said that despite the ambiguity of the claim "much", for the majority of the UK, even on the lowest scale of the high street commission rate, a seller would still save a significant amount by using HouseSimple. Using the UK average house price of £220,713, according to the government house price index is, and an extremely low high street commission of 0.75% would yield a fee of £1655 against their highest fee of £995 would still achieve a saving of 40% which they considered to be "much cheaper".
Assessment
1. Upheld
The ad stated that high street estate agent fees ranged “from 1.5% to 4%” (plus VAT) of the final sale price of the property. The ASA considered that consumers would understand from the claim that estate agents fees would, in the vast majority of cases, fall within that range. We noted that we had previously concluded that the 2011 Which? survey was not adequate to support an average commission figure of 1.5-1.8%. We also noted that the Home Owners Alliance article supplied by the advertiser did not support the claim because it stated that fees of 1% + VAT could be achieved, or even lower in some cases. This was also supported by the surveys of HouseSimple’s own customers where many people reported having received quotes of 1%, and in some cases less, from high street estate agents. We therefore concluded that the claim that high street estate agent fees ranged “from 1.5% to 4%” (plus VAT) was misleading and had not been substantiated.
On this point the ad 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) and 3.33 3.33 Marketing communications that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, the consumer about either the advertised product or the competing product. (Comparisons with identifiable competitors).
2. Upheld
The ASA considered that from both ads (a) and (b) consumers would understand that HouseSimple was making a comparison between their online business model and high street estate agents. Ad (a) said “When you sell with us, you get even better results than with a high street estate agent - and for a much lower fee”. Ad (b) also emphasised the similarities in the type of service that HouseSimple provided by comparing identifiable similarities in the service and then stating that customers saved on average £5,000 in fees. However, we understood that it was standard practice for high street estate agencies to also provide other services including accompanied viewings as part of their fee, whereas HouseSimple did not offer that service as part of their basic fee, but would for an additional charge. We considered it was not clear from the ads that the service provided for HouseSimple’s fee was different to that of high street estate agents and that the omission of that information was likely to mislead in the context of the savings claims made.
We also considered the evidence that HouseSimple had provided to support their savings claims. Ad (a) said that the typical high street agent’s fee was £5,247 and that online agents were “much cheaper”. Ad (b) referred to an average saving of £5,000.The results of the survey, based on the responses of 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. customers who had received a quote from a high street estate agent before switching to HouseSimple, calculated the estimated savings by subtracting their fee from the mean estimated high street fee including VAT. However, the survey results were not weighted for different areas in the country or for property size and we understood that property prices and resulting estate agents fees could greatly vary depending on those factors. We also understood that it was not uncommon for sellers to seek a quote from more than one estate agent, which did not appear to have been accounted for when surveying respondents on the high street agent fee. Whilst ad (b) contained a qualification which explained that the savings claim was based on a customer survey we still expected the survey methodology to be robust. For those reasons we did not consider that the savings claim in ad (b) or the typical estate agent’s fee in ad (a) had been substantiated. In relation to the claim that online estate agents were “much cheaper”, although the fees charged by HouseSimple of between £495 and £895 would in many cases be lower than even a low percentage fee charged on the final property price, that was dependent on the price of the property and we therefore considered that the claim was likely to mislead in the absence of qualification about the basis for the claim.
For the reasons given above we concluded that the savings claims in ads (a) and (b) were misleading and had not been substantiated.
On this 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) and 3.33 3.33 Marketing communications that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, the consumer about either the advertised product or the competing product. (Comparisons with identifiable competitors) and ad (b) breached BCAP Code rules 3.1 3.1 Marketing communications must not materially mislead or be likely to do so. (Misleading advertising), 3.9 (Substantiation) and 3.33 3.33 Marketing communications that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, the consumer about either the advertised product or the competing product. (Comparisons with identifiable competitors).
Action
The ads should not appear again in their current form. We told HouseSimple Ltd to ensure that ads which made comparisons provided sufficient information about the services being compared to ensure that consumers would not be misled about either the advertised service or the competing service. We also told them to ensure they held adequate evidence to substantiate the basis of comparative claims.
