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CAP Guidance on 'Compulsory costs and charges: Delivery charges'

Published on 09 August 2018

How should retailers advertise their delivery charges, in order to comply with the Committee of Advertising Practice’s (CAP) new guidance?

The background

In an increasingly competitive online marketplace, retailers will often engage in creative marketing to drive sales, including offering consumers varied, discounted or even free delivery options.  However, in seeking to differentiate themselves from their competitors through exclusion or limitation of delivery charges, retailers risk breaching the CAP Code and attracting consumer complaints to the ASA, or breaching the Consumer Protection from Unfair Trading Regulations 2008.  To assist retailers in their pricing and delivery practices online, CAP has issued guidance as to what is acceptable behaviour and what is likely to mislead consumers.

The development

CAP’s guidance falls into four categories:

Applicable charges – per order and per product

The CAP Code requires that the quoted price for a product includes any non-optional taxes, duties, fees or charges that apply.  As a result, CAP advises that in the context of online shopping, where delivery charges apply per product (giving the consumer no option but to pay the charges to purchase the product), the charges are by definition “non-optional”, and should be included in the stated price of the product. 

However, CAP advises that where consumers can reasonably obtain a product via other means without incurring a delivery charge (for example, via a click and collect service), retailers need not include the charges as part of the quoted price, but rather should include the charges as a sufficiently prominent qualification to the price.  However, where there are only a limited number of collection points, placing delivery charges in a footnote rather than part of the price, will be looked on “unfavourably” by the ASA. 

Where charges apply per order, retailers should make clear that delivery charges will apply and place such charges as a prominent qualification to the price.  CAP advises that retailers may state relevant charges on a separate web page to the product, provided the page is clearly linked or signposted to from the stated price of the product; revealing charges during the checkout or payment process will likely be considered to be misleading consumers. 

Calculating charges in advance and delivery locations

CAP understands that in many cases, it may not be possible for retailers to calculate delivery charges in advance; charges may depend upon the size and/or weight of the order, the amount ordered, the consumer’s location or other factors not known in advance of the consumer putting together their order.  In such circumstances, CAP advises that retailers should make clear that delivery charges are indeed applicable, and provide consumers with clear information as to how applicable charges will be calculated. 

Retailers should also be upfront with consumers regarding their delivery capabilities; where delivery is not possible to all locations, retailers should use plain and prominent language to address this.  Use of language which implies retailers can deliver to locations outside of their capabilities will be considered misleading.  In addition, where a retailer can only deliver certain classes of product to a location, any claim of delivery capability to this location should be appropriately qualified. 

Free delivery

CAP advises retailers against offering consumers free delivery, unless there are absolutely no restrictions to this claim, including locational factors, or minimum spend requirements.  Therefore, it is not acceptable for a retailer to offer “free delivery”, where delivery is only offered to consumers in certain locations, or to consumers who break through a specified spending ceiling.  Absolute claims like “FREE DELIVERY ON ALL ORDERS” or “FREE NEXT DAY DELIVERY ON ALL OF YOUR ORDERS THIS MONTH” are only likely to be acceptable when there are no restrictions. 

Free products and inflated delivery charges

CAP advises that retailers may charge for the un-inflated costs of postage of any free products, but this charge should be provided up front to the consumer.  However, CAP draws the line at handling, packaging, packing or administration fees; where a product is described as free, these charges may not apply to the consumer or the offer will be considered misleading.  Further, any attempt to understate the reality of delivery charges in order to incentivise a consumer to process a purchase, and make a product more attractive, will be considered misleading; delivery charges should be accurate, and reflect the true cost of delivery. 

Why is this important?

It goes without saying that the retail environment is becoming increasingly competitive, and accordingly it becomes increasingly tempting for retailers to run attractive messaging on product delivery.  However, misleading or confusing delivery offers will almost certainly come unstuck in the event that they come to the attention of the ASA, whether via consumer complaints or competitor challenges.  As such, retailers should take note of this guidance to ensure compliance with the CAP Code. 

Any practical tips?

Above all, CAP’s guidance underlines the need for online retailers to be as clear and transparent on delivery charges as possible.  If in doubt, retailers should put themselves in the shoes of a consumer, and consider the likelihood of consumer confusion in relation to their claims.

Remember also not to get in a muddle about where your delivery services extend to and whether additional charges may apply.  In other words, if you say “free UK delivery” you should check whether this includes the whole of the UK (including the Scottish Isles!).  See separate Snapshot on CAP: new Enforcement Code on Advertised Delivery Restrictions and Surcharges.