An Advertising Standards Authority ("ASA") survey has found that while sales promotions in the UK generally comply with its rules on content, many advertisers do not administer their promotions in line with its standards.
The ASA's Sales Promotion Survey 2008 found that 32% of the promotions sampled failed to meet the standards set out in the British Code of Advertising, Sales Promotion and Direct Marketing (the "CAP Code") regarding how promotions should be administered. The main problems were with advertisers who failed to ensure prize draws were carried out by independent observers, and those who could not prove they had made a reasonable estimate of the demand for a promotion.
In contrast, just 4% of a larger pool of promotions surveyed failed to meet standards regarding content.
The survey findings indicate that while most companies seem to be taking care to ensure their labels and adverts comply with the CAP Code, some may have forgotten the Code also governs how promotions are actually conducted.
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An Advertising Standards Authority ("ASA") survey has found that while sales promotions in the UK generally comply with its rules on content, many advertisers do not administer their promotions in line with its standards.
The ASA's Sales Promotion Survey 2008 found that 32% of the promotions sampled failed to meet the standards set out in the British Code of Advertising, Sales Promotion and Direct Marketing (the CAP Code) regarding how promotions should be administered. The main problems were with advertisers who failed to ensure prize draws were carried out by independent observers, and those who could not prove they had made a reasonable estimate of the demand for a promotion.
In contrast, just 4% of a larger pool of promotions surveyed failed to meet standards regarding content.
The survey findings indicate that while most companies seem to be taking care to ensure their labels and adverts comply with the CAP Code, some may have forgotten the Code also governs how promotions are actually conducted.
The CAP Code
The ASA polices the advertising industry's system of self-regulation. Its non-broadcast (CAP) Code sets general advertising standards and contains special sections on sales promotions.
'Sales promotions' are defined by the ASA as prize draws, competitions, instant-wins and 'premium' promotions.
Prize draws are free and choose prize-winners by chance. Prize competitions allocate prizes based on skill and usually have a charge or require a purchase.
Instant-win promotions are those where consumers receive a prize or details of their prize immediately and can claim it without delay or unreasonable cost or bureaucracy.
Premium promotions are those where all entrants qualify for the same benefits or items, such as 'free gifts' with products, vouchers for 'money-off' the next purchase and schemes to collect vouchers for discounts or promotional products.
The survey
The survey examined the content of 250 promotions from emails, magazines, newspapers and packaging between April and May 2008.
The ASA also chose a smaller sub-set of 22 promotions at random and investigated whether they had been administered in accordance with the Code.
Overall, 6% of the 250 promotions breached the Code because of their content or administration.
Administrative breaches
A higher proportion of promotions surveyed breached the Code for the way they were administered than the way they were advertised.
32% of the 22 promotions investigated breached the Code in this area. All but one of the breaches were because the promoter could not prove a prize draw had been independently supervised, or that it had "taken place in accordance with the laws of chance". The remaining breach represented a promoter which could not prove it had made a reasonable estimate of the likely response to its promotion, and that it could meet that response.
Content of promotions
4% of the 250 promotions surveyed breached the Code for their content. Most of these breaches were by prize draws and competitions (9%), followed by 5% of time-limited discounts (although this represented just one promotion) and 1% of premium promotions (the category with the most promotions surveyed). All the instant win promotions complied with the Code.
Problems with content all revolved around failures to state significant conditions such as closing dates for entries, or restrictions such as age or geographical limits, on the outside of product packaging. This indicates that manufacturers may need to take greater care ensuring that product labels – as well as paid-for advertising – complies with the Code.
Different media
More than half of all the breaches of the Code occurred in emails, compared to about 38% for packaging, 6% for magazines and no breaches in the press. The predominance of breaches in adverts communicated by email may indicate that advertisers are checking email content less stringently against the Code than adverts in other media, perhaps because email campaigns are cheaper to run and therefore cheaper to pull if they are found to breach the Code.
"Unfair" practices
The ASA reprimanded the offending promoters in confidence rather than naming them or instigating its own complaints to the ASA. Instead, it asked the promoters concerned "to provide assurances that future promotions would be prepared and administered to comply fully with the Code's requirements."
However, advertisers looking at the results of the survey should be aware that it was carried out before the Consumer Protection from Unfair Trading Regulations (CPRs) were introduced. These came into force in June 2008. Although many provisions of the CPRs were effectively covered by the Code before this, advertisers should be aware that under the CPRs, certain practices will be deemed "in all circumstances unfair". Now that such rules are part of legislation rather than part of a self-regulatory code, the ASA may take a stronger stance against promoters who break them. The ASA's adjudications on sales promotions should therefore be kept under review for guidance on their interpretation of the CPRs. The specific practices prohibited by the CPRs that relate to promotions are:
- falsely stating that a product will only be available for a very limited time;
- claiming to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent;
- describing a product as 'free' or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery; and
- creating the false impression that the consumer has already won or will win a prize or other benefit, when in fact either: (a) there is no prize or other equivalent benefit; or (b) taking any action to claim the prize/benefit requires the consumer to pay money or incur a cost.
Conclusion
It is interesting that none of the breaches discovered were the subject of complaints to the ASA. The ASA commented that it receives few complaints about on-pack promotions or the administration of promotions. Because performance of promotions is often hidden from consumers, this could go some way to explaining why compliance was generally worse with regards to administration than advertising of schemes.
The survey results seem to indicate a need for promoters to focus their efforts on how they run promotions rather than just how they advertise them. However, it is important to note that only 22 promotions were examined for administrative breaches. It would be interesting to see if the proportion of breaches found in this small sample would be replicated in a larger survey.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
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The original publication date for this article was 03/02/2009.