Ads & Brands Law Digest: December 2023

• Advertising and marketing
• Regulatory 
• Trade Marks 

Advertising and marketing

ASA consults on restrictions for “less healthy” foods

The ASA is consulting on the implementation of new rules further limiting food and drink advertising to children on TV, and in on-demand programme services (ODPS) and paid online ad media.

New rules are due to come into effect from October 2025. They will prohibit ads for identifiable less healthy products from being included in Ofcom-regulated TV services and ODPS between 5.30am and 9pm, and from being placed in paid-for space in online media at any time. Less healthy products are a subset of products classified as high fat, salt or sugar, which have been subject to dedicated restrictions in the UK Advertising Codes since 2007. The less healthy product rules will form a new tier of rules in addition to CAP and BCAP’s existing HFSS rules.

The consultation covers three areas:

• guidance to accompany the new rules;
• transposition of the legislation into new UK Advertising Code rules for each of the restrictions; and
• technical updates to the existing rules to ensure interoperability of the less healthy product rules with the existing rules on HFSS advertising.

The consultation ends on 7 February 2024.

For more information, see here and here.

CAP and BCAP review rules on targeting of cosmetic interventions

On 25 November 2021, CAP and BCAP introduced new rules that prohibit cosmetic interventions advertising from being directed at under-18s. The targeting restrictions came into effect on 25 May 2022 after a 6-month implementation period. The targeting rules essentially require that:

• Ads for cosmetic interventions must not appear in non-broadcast media directed at under-18s;
• Such ads must not appear in other non-broadcast media where under-18s make up over 25% of the audience; and
• Broadcast ads for cosmetic interventions must not appear during or adjacent to programmes commissioned for, principally directed at or likely to appeal particularly to under-18s.

CAP and BCAP have carried out a 12-month review of the rules involving an assessment of relevant complaints and pre-publication advice casework, supplemented by proactive online monitoring. The review did not identify factors that would cause CAP and BCAP to reconsider the basis of the rules or that would prompt changes to their wording. Findings from the proactive monitoring did not identify clear breaches of the rules but did indicate, in some cases, that cosmetic interventions advertisers could make more of the targeting tools to target their ads to an adult audience and away from under-18s.

For more information, see here.

CAP issues Enforcement Notice to industry over tax repayment agent ads

CAP has issued an Enforcement Notice to tax repayment agents over misleading adverts, as part of its work with HM Revenue and Customs.

CAP and HMRC have seen an increase in ads from tax repayment agents and have concerns that despite prior warnings, there are still some breaking the rules. The Enforcement Notice tells advertisers that they must ensure they are not misleading the public through their ads.

Earlier this year, the ASA banned ads from three tax repayment agents for misleading claims within their ads, for example failing to clearly state that the agent would deduct a fee from the refund, or failing to indicate that by using their services the agent would have a legal right to receive the tax refund, which could have an impact on other repayments owed to them for preceding years.

CAP will undertake enhanced monitoring to proactively find ads that break the rules and get them removed.

The Enforcement Notice coincides with HMRC launching a new campaign to help consumers understand the risks posed by misleading ads from some repayment agents and what they should consider when claiming tax refunds on work expenses.

For more information, see here.

Regulatory

CMA investigates consumer goods company for green claims

The CMA continues its investigation into greenwashing and is investigating a well-known consumer goods company following concerns around how it is marketing certain products, within some brands, to customers as environmentally friendly.

In January 2023, the CMA expanded its work on environmental claims to include fast-moving consumer goods. It says that in 2022, shoppers paid out more than £140 billion in total on FMCG products.

For more information, see here.

Ofcom proposes ban on inflation-linked mid-contract price rises

Ofcom is consulting on plans for new consumer price protections in telecoms, including a ban on price increases linked to uncertain future inflation.

When people sign up to a phone, broadband or pay TV contract, they should be clear and certain about what they will have to pay throughout its duration. This hasn’t always happened, because a growing number of companies’ contract terms allow for an annual rise in in-contract customers’ payments, linked to future inflation plus an additional percentage, typically 3.9%.

Ofcom is concerned that inflation-linked price rise terms not only make it hard for people to find the best deal, but also make competition less effective. Further, they require customers to assume the risk and burden of financial uncertainty from inflation, with tangible impacts on their ability to manage costs.

It is proposing to ban telecoms companies from providing for both inflation-linked price rises and price rises that are set out in percentage terms in contracts. Instead, where companies’ contracts provide for any price rises during the contract period, companies must set this out up-front in pounds and pence.

For more information, see here and here.

Ofcom issues report on how VSPs are protecting children

Ofcom has published a report about how popular video-sharing platforms are protecting children from accessing potentially harmful videos.

Under the video-sharing platform (VSP) regime, UK-based services must put in place measures to protect children from encountering videos that may impair their physical, mental, or moral development.

Ofcom founds that the platforms take steps to prevent children encountering harmful videos. However, children can still sometimes face harm while using them.

The protection of children – including ensuring that under-18s have an age-appropriate online experience – is central to the Online Safety Act. In line with Ofcom’s implementation roadmap, it will be consulting on the broad child safety measures under the Act in spring 2024.

Ofcom expects all services regulated under the VSP regime to also be in scope of the online safety regime, after the VSP regime is fully repealed.

For more information, see here.

PayPal amends terms of business to comply with EU consumer law

PayPal has committed to modifying its terms and conditions to make them more transparent and easier to understand for consumers.

It will clarify which clauses apply to consumers and which apply to businesses only; remove the provisions which require consumers to check the compliance with the law (for example, wording such as “to the extent permitted by law”); make it clear that consumers are not liable for damage not caused by their fault or that could not have been foreseen; remove the provisions which impose on consumers the obligation to verify the information themselves (such as stating that PayPal cannot guarantee the accuracy of the information); ensure that consumers understand that they can benefit from the law of their country of residence if there is a dispute; remove terms which cannot be understood by consumers without further explanation or without verification by consumers, such as “merchantability” or “non-infringement”.

The changes will be notified to users via a Policy Update on 21 February 2024 and will formally take effect on 28 May 2024. The Consumer Protection Cooperation Network will actively monitor how PayPal implements the commitments in its terms and conditions, and where necessary, enforce compliance.

For more information, see here and here.

Ofcom issued guidance about broadband technology

Ofcom says it is important that consumers have sufficient and useful information to choose their broadband service. The way fixed broadband services are delivered is changing. The coverage of gigabit-capable networks is increasing across the UK, and these new networks are co-existing with older networks.

In March 2023, Ofcom consulted on proposals to improve the information available to consumers, and published research which found that when choosing a broadband service, some people would find it useful to have information about the underlying technology used to deliver their services.

Ofcom has now issued a statement which explains how and when it thinks broadband providers should tell people about the underlying technology used to deliver their service. Ofcom has also issued guidance to ensure providers give consumers this information in a clear and unambiguous way.

For more information, see here.

CMA investigates Simba Sleep’s online sales practices 

The CMA is investigating if Simba Sleep Limited has misled consumers about price reductions and put unfair pressure on consumers to make quick purchases.
The concerns being investigated focus on:

• Simba Sleep’s use of potentially misleading claims about the extent of price reductions on its mattresses and related products; and
• The use of urgency claims such as countdown timers that may mislead consumers on the availability of special offers.

This forms part of the CMA’s work about Online Choice Architecture and dark patterns.

How the case progresses will depend on the evidence gathered. Possible outcomes include the CMA securing undertakings from Simba Sleep that address its concerns, taking court action or closing the case without further action. 

For more information, see here and here.

CMA consults on draft compliance advice on the marketing of green heating and insulation products

The CMA is consulting on draft compliance advice following concerns it identified about some businesses in the sector making potentially misleading claims about green heating and insulation products and/or providing limited and inconsistent upfront price information. This is part of its review of consumer protection in the sector.

The consultation ends on 24 January 2024.

For more information, see here and here.

Trade Marks

Court of Appeal rules on how the E-Commerce ‘hosting defence’ applies to third party goods that infringe trade marks

The Court of Appeal has clarified the extent to which the E-Commerce “hosting defence” (still a part of UK law post-Brexit by virtue of regulation 19 of the Electronic Commerce (EC Directive) Regulations 2002) can be relied upon by the host of an e-commerce website to avoid liability for trade mark infringement if the host allows third parties to sell infringing products (in this case apps) on the site alongside the host’s own products. 

For the “hosting defence” to be available at all, the role that the e-commerce host plays must be “of a mere technical, automatic and passive nature”, which implies that it “has neither knowledge of nor control over the information which is transmitted or stored.”  If the host passes that first hurdle, it can take advantage of the defence if it can then show that it did not have actual knowledge that the third party products were infringing (such knowledge must be “specifically established or readily identifiable”) and acted expeditiously to remove them once notified that they were infringing.  In this case, the defendant did not jump the first hurdle – the Court of Appeal held that its role in running the site and approving third party apps before they were made available meant that its role was not merely technical, automatic and passive, and thus the hosting defence was not available to it. 

The background facts were as follows.  Samsung manufactured and sold smartwatches (shaped and wearable much like a “traditional” watch), the business model for which included a feature allowing the appearance of the watch-face to be determined by the use of individual apps, such apps being downloadable from a Samsung website.  Samsung had allowed third party app creators to produce and make available watch-face apps on the Samsung website, alongside their own apps for Samsung-branded watch-faces.  Legal proceedings were commenced against Samsung by members of the Swatch group of companies (which include also Tissot, Longines, Omega and Breguet, for example) which argued that their trade marks had been infringed by Samsung when third party apps on its site included the Swatch group’s brand names on their digital watch-faces.  The High Court had agreed with this claim, finding Samsung liable for trade mark infringement.  Although it was third parties that had introduced the Swatch group branding into the apps, Samsung was liable for infringing use of the marks given its involvement in running the website and approving the apps for sale.

The Court of Appeal has upheld the High Court ruling, confirming Samsung’s liability for infringing the various Swatch group trade marks that were included in the third party apps available via the Samsung e-commerce site.  The use of apps to allow the watch-face on the Samsung smartwatches to be changed was an important part of their functionality and thus of Samsung’s business-model, and Samsung had a two-stage approval process (both technical and content-focused) before apps were approved for sale.  Even though it was the third party app developer that controlled the price and timing of availability, Samsung’s involvement in the process meant that the Court of Appeal agreed with the High Court that Samsung itself was using the trade marks and could not benefit from the “hosting defence” (its involvement with the apps was not merely technical or passive).

This is a potentially helpful judgment for brand-owners in their battle against infringing products made available by third parties on e-commerce sites.  It clarifies that the hosts (i.e. the e-commerce providers), in addition to the third parties, may be liable in circumstances in which they do more than “merely” passively host – for example if they review the products before they are made available, or if the products concerned relate closely to functionality of products produced by the e-commerce providers themselves.

For more information, see here.