Some discount voucher adverts have been misleading, advertising watchdog says

The Advertising Standards Authority (ASA) said that it had examined 53 cases against coupon advertisers in the period spanning less than six months, with 29 cases involving popular consumer voucher operator Groupon. Groupon has more than 6 million UK customers.

"While it is far from ideal to see any advertiser break the rules the number of breaches of the Advertising Code by companies offering discount vouchers should be taken in context of the thousands of ads they produce each year," the ASA said in a statement sent to OUT-LAW.

"The ASA will not hesitate to clamp down on those companies who mislead consumers but we are encouraged by the willingness of these operators to work with us, to amend their ads when they get it wrong and to take advantage of the expert Copy Advice service that is available to help them get their ads right," it said.

Since March ASA has made five adjudications against Groupon and informally resolved 24 cases against the company, the watchdog said. One complaint against Last Minute Network Ltd, another voucher advertiser, was upheld in the same period. There were a further 23 informally resolved cases against Last Minute Network (7), and other voucher operators LivingSocial Ltd (11) and Kgb (UK) Ltd (5), ASA said.

In four of the five adjudications where complaints against Groupon were upheld ASA found that adverts had been misleading.

Misleading advertising is prohibited under UK advertising rules. The rules governing print ads are set out in the The UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code) while the The UK Code of Broadcast Advertising (BCAP Code) states the rules for broadcast ads.

Advertising expert Iain Connor with Pinsent Masons, the law firm behind OUT-LAW, said voucher operators should also pay particular attention to advertising rules on the availability of products.

The CAP Code states that in general products which cannot be supplied should not be advertised and that businesses should not advertise goods without having "reasonable grounds" to believe they can satisfy demand or have explained why they might not be able to. The BCAP Code provides that "advertisements must not mislead consumers by omitting restrictions on the availability of products".

“The ASA expects all advertisers to play by the rules.  The fact that users of these ‘group purchase’ vouchers know that there will be conditions attached does not mean that they will not still have a reasonable expectation of getting what they want at the advertised price without having to study the small print in detail,” Iain Connor said.

In its most recent Groupon adjudication ASA found that an email for a 'deal of the day' voucher for teeth bracing and whitening was misleading. The email offered voucher recipients a deal to pay £98 to trigger a £1650 discount on the treatment. In small print the it explained that those taking up the offer would also have to pay the remaining balance for the £3,500 treatment. The ASA said that the email was unclear and confusing and therefore misleading. The ASA prohibited the email from appearing in the same form again and told Groupon to ensure the nature of their offers are clearly made in future emails and that the advertised price is correct.

Groupon said it checked to ensure whether businesses its vouchers featured are legitimate and that adverts are not misleading, according to the Times.

"We work closely with the ASA and other regulatory bodies to ensure all our deals adhere to all the relevant regulations and are a fair reflection of the customer's experience," a Groupon spokesman said, according to a report by the Times.

ASA can refer misleading advertisers to the Office of Fair Trading, the consumer protection watchdog, which has the power to bring legal proceedings for breaches of UK consumer protection laws.

Earlier this year the OFT forced Markco Media and its director to sign signed promises not to advertise products where there is "a disproportionately inadequate supply".

The OFT had investigated Markco Media, the company behind Groupola - the group-buying website, and found that Groupola had engaged in 'bait pricing', where consumers are attracted by prices that apply to so few products that they do not have a realistic chance of buying them at the advertised price.

Groupola advertised £499 iPhones for £99 for people who signed up to its scheme and agreed to receive daily email alerts. Just under 15,000 people did sign up after a campaign of advertising, promotion and an interview with a national newspaper.

The company did not say that only eight phones were available for the advertised price.

"Bait pricing - having only a small proportion of stock available at the advertised offer price - is one of the practices the OFT identified as having the greatest potential to cause harm and one which it has prioritised for enforcement action under the Consumer Protection from Unfair Trading Regulations," the OFT said at the time.

The OFT also criticised Markco Media because Groupola's Facebook page contained positive comments from someone the OFT identified as an employee of the company. This activity is often referred to as 'astroturfing' as it fakes grass-roots support for a product or service.

The Consumer Protection from Unfair Trading Regulations state that pretending to be a consumer and giving yourself a positive review is 'an unfair commercial practice'. This is a criminal offence and business proprietors are potentially liable for an unlimited fine and a prison sentence of two years.

The practice is also contrary to the CAP Code. Astroturfing breaches the CAP Code as the marketing is not fair, legal, decent, honest and truthful - the key principles of the self-regulatory CAP Code.