Free could cost you!

The post-Christmas and January sales are the busiest time of year for the retail industry, with record numbers of us recently taking to the shops on Boxing Day.  However, businesses should think carefully before using promotions involving free offers warns Geoffrey Sturgess, commercial solicitor.

There are detailed rules on what is and is not acceptable produced by the Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP), both of which have their rules enforced by local Trading Standards departments.  CAP and BCAP issued their latest guidance notes “Don’t pay the price by misusing the word free” in July 2012 which follows an earlier note issued in September 2010. Both can be found on the CAP website, where businesses can also access fast, free advice on whether their advertising campaign complies with the Code.

Whilst CAP and BCAP have no direct enforcement powers, their advice can help you avoid complaints, which will generally come from a competitor.  These can be very time consuming and costly, and may also generate damaging publicity. A failure to comply with the code by a Business to Consumer (B2C) business is likely to be a criminal offence under the Consumer Protection from Unfair Trading Regulations, and can be punishable by fines or imprisonment.

Geoffrey says “The area is a nightmare; first because it is not easy to decide what is acceptable and what is not but secondly because the enforcement authorities only pick up on a small proportion of offenders. This means that doing what others are doing does not automatically mean that you are compliant.

“When the Consumer Protection from Unfair Trading Regulations first came into effect in 2008 it was thought that “BOGOF” (buy one get one free) offers would always be illegal—as the consumer was paying for something, how could anything be free? The notes explain that a BOGOF offer can be compliant, so long as the paid for item is no more expensive, or not worth less, than the same item sold without the offer.”

Another difficult area is goods or services ‘packages’, for example a bicycle sold with safety accessories, or an internet and TV package. An item should only be described as free if it is realistic to purchase the package without the free item and the reduced package is available at the same price. Upgrades can be described as free for a limited period, until they become part of the standard package.

Geoffrey recommends, “B2C businesses need to develop a relationship with their local Trading Standards department and take advantage of the free advice offered by CAP. Then if a complaint is made your activity will be regarded with greater sympathy.  Businesses should also be aware that advertising and sales promotion on their websites, even “factual” descriptions of their products and services are now open to scrutiny by CAP and there have been recent adjudications over web based promotional activity and product descriptions. As the copy for websites tends to be written in-house there is a greater chance of getting it wrong as there may be a limited understanding of the legal implications.”

For more information on any of the topics raised, contact Geoffrey or the Warner Goodman Commercial Team on 02380 717717, or visit their website www.warnergoodman.co.uk.  To find out more about The Committee of Advertising Practice, visit their website www.cap.org.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.