ASA Ruling on John Lewis Partnership plc ta John Lewis
When is it misleading to claim that an item, purchased as part of a bundle, is “free”?
On 15 February 2017, John Lewis offered on its website an LG TV 55B6 with a “FREE LG SH7 sound bar” for £1,999.
The complainant, who understood that the TV had previously been available for £1,749 without the sound bar, and that the sound bar was sold separately for £259, challenged whether the “FREE” claim was misleading.
John Lewis said that in the month prior to 14 February 2017, the TV had received a discount of £250, partially funded by the manufacturer. That financial support was withdrawn on 15 February 2017 and the TV reverted to its original selling price of £1,999. Also on 15 February 2017, however, the manufacturer offered financial support for another promotion. This was a bundle which included a free sound bar worth £259.99. John Lewis confirmed that the TV without the sound bar was available for £1,999, and provided evidence of the selling price since May 2016.
John Lewis considered that the price of the TV had not been inflated to cover the cost of the sound bar, as the support from the manufacturer was only available when the TV was bought as part of the bundle.
The ASA upheld the complaint.
It considered that consumers would interpret the “FREE” claim to mean that the usual selling price of the TV was £1,999, and that the sound bar had been added at no extra cost. In particular, the ASA considered that consumers would expect that the price immediately before the promotion would have been £1,999, with no sound bar included.
In fact, the promotion under consideration had immediately followed another promotion, where the TV was offered for £1,749. Having reviewed evidence of the TV's selling price, the ASA noted that the price of the TV had changed regularly since May 2016, and had often been available for £1,749. It therefore found that £1,999 was not the usual selling price.
The fact that the lower prices had been driven by financial incentives, which had been offered by the supplier to both John Lewis and other retailers, did not alter the ASA's findings. Indeed, it considered that those previous reductions had undermined the expectations consumers would have about the sound bar being added without the price being increased. The reductions also contributed to the finding that £1,999 was not the usual price for the product.
The ASA found that the claim was misleading, in breach of CAP Code rules 3.1 (Misleading advertising) and 3.24.2 (Free).
Why is this important?
The decision is a useful clarification on the ASA's approach to misleading pricing when items are offered “free” as part of a bundle. What matters is the customer's impression of the “usual” price for the products in the offer. The usual price is determined by reference to historic prices for the products, and in particular the price immediately before the promotion.
Any practical tips?
Think like the customer! To avoid adverse rulings from the ASA, companies should always view their offers from the customer’s perspective. Remember – the customer will usually not be aware of behind-the-scenes financial incentives, which would otherwise provide a perfectly good explanation for price fluctuations.