Ads & Brands Law Digest: September 2023

In this edition we cover CAP guidance on influencers, on free trials and subscriptions, and on advertising to older people. We also consider the UK’s new consultation on consumer law, more ICO fines for unwanted marketing calls, the finalisation of the UK-US data bridge as an extension to EU-US Data Privacy Framework, the fact that the Online Safety Bill has passed through the parliamentary process and an update from Ofcom about the advertising rules for public service broadcasters.

• Advertising and Marketing

• Regulatory

Advertising and Marketing

CAP issues reminder about general CAP Code compliance for influencers

CAP has issued a guidance note for influencers about issues other than the usual disclosure requirements. It points out that if you are an influencer who receives any compensation for your posts (monetary or otherwise), and if the brand you work with has any editorial control or veto over what you publish, the CAP Code applies to you.

The guidance covers three key points:

• Do not present a misleading impression of your experience. Although advertisers and those working for them will naturally portray their products in the best possible light, misrepresenting features you know don’t work as intended, or exaggerating their qualities will likely be problematic. Also, if you have only used a product once, it is likely to be misleading if you wax lyrical on the benefits of long-term use.

• Make sure you hold evidence for any claims likely to be seen as objective. Whilst there is allowance for “puffery” (claims unlikely to be perceived as a genuine statement of fact), many marketing statements will fall within this category, from price claims to the features or efficacy of a given product.

• Take particular care around endorsing products in sectors such as gambling, alcohol, and food supplements. If you are (or look) under-25, you are not permitted to promote gambling or alcohol products. Celebrities (which are likely to include prominent influencers) are prohibited from endorsing medicines. Medicinal claims cannot be made for food supplements unless registered by the MHRA. E-cigarettes and vapes cannot be advertised on social media at all.

For more information, see here.

CAP issues guidance on free trials advertising

In a “free trial” or other promotional offer subscription model, a consumer enrols in an ongoing payment arrangement to take advantage of a “free trial” product offer, test subscription, or other promotional benefit. If the consumer does not cancel the trial (often within the “free trial” period) they become liable to make a payment, or ongoing payments, as part of the subscription plan to which they signed up, knowingly or otherwise.

While “free trials” ads aren’t in themselves misleading, there are some do’s and don’ts to be aware of when advertising your “free trials” or subscription services:

Do remember that whatever is being offered using the phrase “free trial”, it must be genuinely ‘free’ to the consumer. If there is an additional ‘delivery’ element to a free trial, it is acceptable to charge only the genuine, un-inflated cost of postage. The ASA has previously ruled that postage charges have to be made clear when making “free” claims.

Do not charge for packing, packaging, handling, or admin fees if you want to claim that it’s “free”.

Do ensure that significant terms and conditions of offers are included in ads, and the ad directs consumers to the full terms and conditions. The ASA has previously ruled that an ad was misleading because it did not make clear that after an initial free trial the consumer was also signing up to a yearly subscription. Significant conditions include:

• what a consumer needs to do to take up the free trial,

• whether a paid subscription starts automatically (after the trial) unless cancelled,

• how and when to cancel, especially if the arrangements for doing so differ from what consumers might reasonably expect,

• the extent of the financial commitment if the subscription is not cancelled during the trial; and

• any other significant conditions for example, the end date for starting the “free trial” or limitations on who can take up the “free trial” such as new customers only.

Do not just rely on stating “Ts&Cs apply”. Rule 3.23 of the CAP Code requires that marketing communications must make clear the extent of the commitment the consumer must make to take advantage of a “free” offer.

Do ensure that significant conditions are upfront, prominent, and distinct from other information so that consumers will see them before deciding to start the free trial.

For more information, see here.

CAP issues guidance on advertising to older people

CAP has issued a reminder of points to bear in mind when targeting advertising at older people.

Many ads for products or services aimed at older people, such as funeral plans, life insurance, heating/energy etc. imply in the ad that the product has been designed solely for that group, or that only that group is eligible. If this is not the case, and the product or service offers nothing unique to a certain demographic, then ads should not misleadingly imply that it does.

The ASA receives thousands of complaints a year about misleading pricing claims, and marketers should bear in mind how clear their ad is, especially if addressing a specific audience.

The guidance note also considers a recent decision on advertising cryptocurrency. Along with not making clear the risks associated with this type of investment, the ASA also investigated whether the ad was socially irresponsible for suggesting Bitcoin was a secure way to invest savings and pensions. The ASA considered that the ad was clearly aimed at an older readership, highlighting the medium it was placed in, the testimonial and the repeated mentions of pensions. The ASA concluded that the ad irresponsibly suggested that purchasing Bitcoin through Coinfloor was a secure way to invest one’s savings or pension, particularly given that the audience it addressed were likely to be inexperienced in their understanding of cryptocurrencies.

In this instance, the ad was seen to exploit credulity or inexperience in the older target audience. However, as cryptocurrency is a relatively new sector, the numbers of those who are fully clued-up is relatively small across all ages, and marketers should never exploit that.

For more information, see here.

Regulatory

UK government consults on consumer law

The UK government has launched a new consultation on consumer law, even while the Digital Markets, Competition and Consumers Bill passes through the parliamentary process.

The consultation covers various areas of consumer law, including fake reviews and pricing:

• The display of pricing information - the government proposes to reform the Price Marking Order (which applies in Great Britain) to simplify requirements on unit pricing so it is more consistently applied, to clarify requirements on legibility and on how promotional pricing should be displayed, and to review the “small shops” exemption (shops with a small footprint do not have to comply with the Order).

• Hidden fees and drip pricing - drip pricing is problematic when it is used to attract a consumer to a purchase with a low base price, when that base price is misleading because of the subsequent addition of further mandatory fees. However, in other cases drip pricing reflects the nature of the product sold, for instance when the personal preferences of the consumer are established, and optional additional features are added to the product. The consultation seeks views on whether and how the government should approach the issue, and to identify drip pricing that may be grounds for future government intervention or stronger guidance.

• Fake and misleading reviews - the consultation seeks views on legislating to expressly prohibit the buying and selling of fake reviews, and a firm’s failure to take reasonable and proportionate steps to ensure reviews displayed to consumers reflect genuine consumer experiences.

• Online platforms - the DMCC Bill re-establishes online platforms’ existing responsibilities under consumer law to demonstrate professional diligence with respect to consumer purchases they facilitate. The government seeks views on whether and how it should build on the existing definition of professional diligence. The aim would be to ensure that online platforms and consumers have greater clarity over their respective rights and responsibilities. In the main, online platforms take active steps to ensure consumers using their sites are treated fairly. As a result, the government is particularly interested in developing the concept of professional diligence directly with online platforms, as well as with consumer representatives.

• Online interface orders - the government is considering whether to extend the power to apply to court for online interface orders (OIOs) and interim online interface orders (IOIOs) to additional enforcers as well as the CMA to enable them to tackle online conduct that may not be adequately covered by their existing powers.

For more information, see here and here.

ICO issues fines regarding unwanted marketing calls

The Information Commissioner’s Office (ICO) has issued fines totalling £590,000 to five companies for collectively making 1.9 million unwanted marketing calls which targeted the elderly and people with vulnerabilities.

The ICO says that this is part of a wider crackdown to tackle rogue companies using pressurised sales techniques to sell insurance for white goods, such as washing machines and fridges, and other household appliances, including TVs.

£1.45 million in fines have now been issued by the ICO since October 2021 to 16 companies for making illegal, unwanted marketing calls, many to people who had taken steps to block nuisance calls by registering with the Telephone Preference Service. The fines resulted from detailed investigations by the ICO, assisted by intelligence from National Trading Standards

The companies often target older people and people with vulnerabilities, and in most instances, people who already had or did not need the service.

For more information, see here.

UK-US data bridge finalised as extension to EU-US Data Privacy Framework

The UK government has published the Data Protection (Adequacy) (United States of America) Regulations 2023 (SI 2023/1028). The Regulations come into force on 12 October. The Regulations are an adequacy decision for the US, (the UK-US data bridge).

The UK-US data bridge provides that the US provides an adequate level of protection for data transfer purposes if the transfer is to an organisation in the US listed on the EU-US Data Privacy Framework as participating in the UK Extension to the DPF.

For more information, see here.

Online Safety Bill completes parliamentary process

The Online Safety Bill has completed the parliamentary process and is now due to receive Royal Assent. It imposes a duty of care on services such as social media providers and search engines to prevent illegal content and activity online.

Before the Online Safety Act becomes fully operational, the Secretary of State must make secondary legislation and Ofcom must publish a number of codes of practice. Ofcom will consult on the first set of standards to be met by tech firms to tackle illegal online harms in the weeks following Royal Assent.

For more information, see here.

Ofcom issues update on review of advertising rules

Following a period of consultation, Ofcom has decided not to remove the stricter TV advertising rules that apply only to commercially-funded public service broadcasters at this time.

All UK broadcasters are subject to restrictions on the quantity and scheduling of advertising on their channels. However, the commercial public service broadcasting (PSB) channels – ITV, STV, Channel 4, S4C and Channel 5 – are subject to tighter advertising restrictions than non-PSB commercial channels, such as ITV2, 5USA and Pick.

Ofcom still believes that there may be merit in harmonising TV advertising rules by relaxing the additional restrictions on PSBs, but has decided to retain the status quo for the time being.

In reaching this decision, Ofcom recognised that the potential benefits to audiences, public service broadcasters and the wider market are uncertain. It also considered that proceeding would mean that viewers would be likely to see increased advertising in “peak” evening hours which contain news. This in turn could lead to a reduction in news minutes, which risks diminishing a particularly important genre of PSB content with high societal value.

Instead, Ofcom considers it appropriate to consider the impact of changes to TV advertising rules on viewers in the broader context of other changes to the PSB system in the coming years – including the implementation of the Media Bill.

For more information, see here.