Ad description

Claims on the website www.rac.co.uk promoted breakdown cover. A price for each type of cover was stated as a "Web Price", above which there was a corresponding, higher, "List Price" that had been struck through.

Issue

The Automobile Association Ltd, who believed that the stated "List Prices" were not reflective of the prices at which each type of breakdown cover was generally sold, challenged whether the reference prices and the implied savings claims were misleading.

Response

RAC Motoring Services stated that the term "list price" indicated their recommended selling price, and was an established price at which the purchase of breakdown cover was usually quoted to customers through all sales channels other than their website, namely their call centre, their direct sales force and their patrols. They explained that their guidance to agents was that they should always seek to sell the breakdown cover at list price. In some circumstances, however, where a sale could not be concluded at that price, the agent was allowed to offer a discounted rate.

To illustrate that the "list prices" were reflective of the prices usually quoted to customers through channels other than their website, the RAC provided documentation showing pricing information for different types of breakdown cover that was issued to their patrols, their direct sales force and their call centre staff. They also provided a sales report covering the three months preceding the complaint, which showed the number and proportion of transactions at list price for each different type of breakdown cover offered, exclusive of sales made through the website. They noted that there was a wide variation between months in terms of the proportion of total sales made at list price. They commented that this was reflective of the fact that they had run other offers in sales channels other than the internet, and that many of their established customers, who benefitted from reduced rates in recognition of their loyalty, renewed their contracts in the same month.

The RAC also provided details of the average discount off the list price for those sales that had been made at a lower figure over the course of the three months preceding the complaint, as well as the percentage of sales that had been made at or within five and ten per cent of the list price during that time. Those data sets again excluded sales made through the website. The RAC commented that, whilst they considered the evidence to demonstrate that the list prices were reflective of, and not significantly different from, their usual selling prices, they considered that consumers would generally not expect list prices to be reflective of the usual selling price of each product.

Assessment

Not upheld

The ASA considered that consumers were likely to understand from the juxtaposition of "list" prices and "web" prices on the RAC's website that the "web price" was a price only available for internet sales and that the "list price" was a genuine retail price for all other sales channels. We also considered, however, that consumers would recognise the services offered as belonging to a fluid pricing market, and because of the use of the term "list price", they would not expect the "list" prices to be the prices at which the products were usually sold. There nevertheless remained an onus on the advertiser to demonstrate that the prices were routinely quoted and frequently charged to consumers.

We noted that the list prices quoted in the ad matched those on the "Standard Price List" issued to RAC agents selling through patrols and direct sales routes, and the "No Discounts" prices listed on their internal call centre system. We therefore acknowledged that the list price appeared to be the price at which the RAC aimed to sell their products through sales channels other than the internet.

We considered the sales data supplied by the RAC, which presented the monthly number and proportion of transactions at list price across all channels other than the internet. We noted that a large number of sales had been made in each month at the list prices stated in the ad. The monthly breakdown of sales demonstrated a wide fluctuation in the proportion of sales at list price, which we understood from the RAC was partly caused by the existence of other offers on the same products and sales at reduced prices to established customers. Notwithstanding the degree of variance in the sales, however, we were satisfied that the data demonstrated that the list prices were genuine retail prices and were prices at which the products were frequently sold.

Because the evidence supplied by the RAC demonstrated that their sales teams were instructed to quote the list prices, and because the sales data indicated many sales at those prices, we concluded that the reference prices and implied savings claims were not misleading.

We investigated the claims under CAP Code (Edition 12) rules  3.1 3.1 Marketing communications must not materially mislead or be likely to do so.  (Misleading advertising),  3.7 3.7 Before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.  (Substantiation),  3.17 3.17 Price statements must not mislead by omission, undue emphasis or distortion. They must relate to the product featured in the marketing communication.  (Prices) and  3.40 3.40 Price comparisons must not mislead by falsely claiming a price advantage. Comparisons with a recommended retail prices (RRPs) are likely to mislead if the RRP differs significantly from the price at which the product or service is generally sold.  (Price comparisons), but did not find them in breach.

Action

No further action necessary.

CAP Code (Edition 12)

3.1     3.17     3.40     3.7    


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