Misleading ads can prove costly

Victoria Judge, company and commercial partner at Gotelee & Goldsmith, warns of the pitfalls of price-comparison advertising and other misleading claimsBUSINESSES should ensure that their advertising is accurate and not misleading or face some potentially expensive consequences.

Victoria Judge, company and commercial partner at Gotelee & Goldsmith, warns of the pitfalls of price-comparison advertising and other misleading claims

BUSINESSES should ensure that their advertising is accurate and not misleading or face some potentially expensive consequences.

This warning follows a decision by the Advertising Standards Authority (ASA) that a poster by online retailer and auction site eBay was misleading in making the claim that it was “25% cheaper than the high street on brand new items”.

The ASA found that, although the statement was true in certain cases, the fact it was based on an average price meant that some stores might be closer in price to eBay's 25% claim - or in some cases even cheaper. The ASA banned the poster advert from appearing in its current format and upheld that eBay must in future have strong evidence to support such comparative claims.

This ruling really highlights the dangers involved in making such a sweeping claim and is particularly significant in today's difficult economic climate. More than ever, consumers are basing their buying decisions on value, making price-comparison advertising extremely attractive to companies.

However, competitors are likely now, more than ever, to report claims to the ASA. The cost involved in having to withdraw an advertisement can be high. In addition to the risk posed to your reputation, there is a good chance that if you have breached the ASA's codes you will also have breached the Consumer Protection Unfair Trading Regulations 2008. So, you could have Trading Standards knocking on your door as well as the ASA.

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A good rule of thumb is that advertisements should be legal, decent, honest and true. Importantly, even if you believe a claim is true, you must have evidence to support it. So, if you say you are the cheapest or the best, you should have market data to support this claim.

Also, there are extra rules for some types of advertising. For example, medicinal claims should not be made about foods. Claims that a certain amount of weight can be lost in a certain amount of time should not be made about weight loss products and credit advertising is heavily regulated. In addition, particular care should also be taken if you are advertising to children or other vulnerable groups and when running prize draws and competitions.

If a business is uncertain about the legality of its advertising or other promotional activities , it is always sensible to take professional legal advice. If you have any concerns, a straightforward consultation with a commercial law expert will save a great deal of stress and potentially a lot of expense.