ASA upholds complaint against Dormeo for misleading “half price” claim

The question

How much care do you need to take balancing discount vs usual selling price periods for a sales reduction?

The key takeaway

If you’re putting a product on sale, always check how long it has been at the higher price compared to the period for which the price comparison will be made. A price reduction is likely to be deemed misleading if it runs for a longer period than the period at which the higher price was offered.

The background 

Dormeo featured a TV ad featuring a voiceover stating “Right now, the Memory Classic mattress is half price …”. The on-screen text accompanying the voiceover stated “HALF PRICE”, and a box with numbers counting down from £399 to £199 appeared, with the words HALF PRICE showing above the final figure. More on-screen text appeared, stating “OFFER MUST END MONDAY!” as the voiceover continued, stating “… but you must hurry, this half price offer ends on Monday.”
Dormeo considered that their product followed the relevant advertising rules. They had expected sales to be higher during promotional periods, due to the price difference. During non-promotional periods the product had been de-ranked and not featured on home page promotions and appeared lower on product listings and in on-site search results.

The development 

The Advertising Standards Authority (ASA) considered that consumers would understand “half price”, coupled with the graphic, as a saving against the usual selling price of the product at the time the ad appeared. The BCAP Code requires that price statements must not mislead consumers by omission, undue emphasis, or distortion. 

As well as the BCAP Code, the ASA also factored in the CTSI Guidance for Traders on Pricing Practices (Guidance). The Guidance states that any specific price advantage claimed by advertisers must not be misleading or unfair and requires advertisers who use pricing practices which indicate a saving against another price to be satisfied that their quoted saving was genuine, and therefore not unfair. The Guidance states that advertisers should consider how long the product was on sale at the higher price, compared to the period for which the price comparison was made, and advises that a practice is less likely to comply if a comparison is made for a materially longer period than the higher price was offered.

The dates and figures provided by Dormeo showed that the Memory Classic Mattress had been offered at the “half price” figure referenced in the ad for a slightly longer period than it had been available at the listed “full price”. The information showed that the two prices had followed a monthly “on-off” pattern between January and July of 2021, alternating between those two prices. The ASA did not consider that the intervening periods between the promotions were sufficient in length to establish that the higher price of the product was the usual price. The ASA considered that those regular fluctuations would have been likely to affect consumers’ perceptions of the value of the offer, and whether the claimed saving was genuine.

The Guidance advises that a practice is less likely to comply if a retailer cannot provide evidence to show that significant sales were made at the higher price when compared to the promotional price. A retailer should not repeatedly use a reference price while knowing that they had not previously sold a significant number of units at that price.

The sales data that Dormeo provided did not demonstrate that there were significant sales at the higher selling price outside of the promotional periods. The ASA considered this to be relevant in establishing whether the higher prices were the usual selling prices. Accordingly, it concluded that the savings claim was misleading.

Why is this important?

Savings claims directly impact the transactional mind of the consumer. It follows that they are one of those marketing activities which are most heavily policed by the regulators, namely the ASA, the CMA and Trading Standards.

Remember that a misleading pricing claim will be in breach of the Consumer Protection from Unfair Trading Regulations 2008, which (unlike a breach of the CAP Code or BCAP Code) brings with it the threat of a criminal prosecution and fines by the CMA or Trading Standards. Under the Regulations (see Schedule 1), it is a strict liability offence to “falsely state that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice”. On one level, therefore, Dormeo were lucky that the complaint came to the attention of the ASA, rather than the CMA or possibly Trading Standards. 

Any practical tips?

You must follow the rules for savings claims, which starts by ensuring that your discounted price has not run for longer than you normal higher selling price. The best reference point for all pricing claims is the CTSI Guidance, so do refer to it if you are ever in any doubt as to the claim you are making.

Finally, don’t forget that the Omnibus Directive is on its way, fully landing in Europe in May 2022. This contains specific reference to Was/Now pricing claims, requiring that any lower price indicated must have applied within a period of at least 30 days preceding the price reduction statement. While the Omnibus Directive does not apply in the UK post-Brexit, it does apply to all traders selling to EU consumers.

Winter 2021