Background

TransferWise Ltd is authorised by the Financial Conduct Authority (FCA) for the provision of payment services.  As of 22 July 2016, complaints about misleading non-broadcast advertising for such services will be referred to the FCA for their consideration.

Summary of council decision:

Two issues were investigated, both of which were Upheld.

Ad description

A poster for Transferwise.com stated "$CAMM€D YOUR BANK IS SECRETLY OVERCHARGING YOU ON INTERNATIONAL MONEY TRANSFERS  Next time, save 90% with TransferWise".

Issue

The complainant challenged whether the following claims could be substantiated:

1. "Your bank is secretly overcharging you"; and

2. "save 90% with TransferWise".

Response

1. TransferWise Ltd explained that the claim "your bank is secretly overcharging you" was based on the lack of information that banks provide to their customers about the profit they made from a hidden charge that consumers paid in addition to any stated transaction fee in relation to international money transfer.  It was a non-optional fee and was not charged in association with any service or product offered by the provider, but affected the exchange rate paid by the customer.  They believed the customer would always receive less than they would at the 'real' exchange rate, as a result of the adjusted exchange rate offered by the provider.

They explained that the World Bank had conducted extensive research, which showed that this lack of transparency caused serious detriment to consumers, some of whom responded to marketing claims such as 'commission-free' without understanding that the exchange rate had been inflated.  They sent the results of a TransferWise-commissioned poll, which they believed demonstrated a common confusion and in some cases ignorance, among people whose income and business models depended upon transferring money internationally, and several other online surveys and publications to support their statements, including from the World Bank, Consumer Focus and the Office of Fair Trading (OFT).

TransferWise also submitted screen shots of a selection of banking providers' international money transfer pricing pages, which, they pointed out, made no mention of a charge being applied within the exchange rate.  They believed, without this information, consumers were effectively being misled because their banking provider applied a charge in the exchange rate markup.  They explained that a common theme of ads and pricing pages for international money transfer services through banks was the use of reassuring language such as "exchange rate certainty" and "up to date exchange rates", which they believed suggested that the exchange rate was not a costly element.  They said none provided an explanation in terms of the percentage difference from the midmarket rate and, therefore, banks did not explain the cost, or that a cost applied.

TransferWise pointed out that the EU Directive on payment services in the internal market (2007) set out the ethos and rules by which payment service providers should communicate pricing information to their customers. It stated that "It is essential for payment service users to know the real costs and charges of payment services in order to make their choice.  Accordingly, the use of non-transparent pricing methods should not be allowed …".  They believed banks did not make clear that the non-optional exchange rate mark up was factored into their pricing structure and so users were unable to make a fair choice.

2.  Transferwise explained that the claim "save 90% with Transferwise" was based upon the calculation that consumers would save approximately 90% for sending money abroad through TransferWise instead of using a high street bank.  While banks charged roughly 5%, TransferWise charged a 0.5% fee for any transaction over £200, with minor variations depending on the currency route, all of which was explained on the TransferWise website.

They said they had independently commissioned a mystery shopping research company to investigate industry prices and submitted their results to the ASA.

Assessment

1.  Upheld

The ASA understood that TransferWise aimed to highlight in their advertising message their understanding that banks added a mark-up fee to any exchange rate they charged their customers.  We noted their view that this fee was often undisclosed and that consumers were unaware of the actual cost of any international money transfer.

We considered that the claim "Your bank is secretly overcharging you on international money transfers" was likely to be understood as meaning that banks applied undisclosed fees to their customers, such that they unknowingly paid extra costs as part of the international money transfer process and that this practice applied to all banks.  In addition, in the context of an ad with the headline "Scammed", we considered that the ad as a whole was likely to be understood as an implication that banks acted in a fraudulent way, to take money from international transfer customers.  We understood, however, that it was a statutory requirement for banks to publish their tariff of charges and also that all exchange rates a consumer paid were made clear prior to purchase.  While we acknowledged the point TransferWise intended to make, that the exchange rate quoted by banks was not the same as the 'real' rate they paid, once a bank's own rate of exchange was applied, we considered that this was unlikely to be understood as equal to customers being 'secretly overcharged'.     

The evidence submitted used, as example, the rates of five different providers. Given that the claim was an absolute one, we considered that, by way of substantiation, evidence to show that all banks had been assessed, and all had been found to be engaged in dishonest practices should be produced.  

Because this was not the case, we concluded that the claim "your bank is secretly overcharging you" had not been substantiated and was likely to mislead.

On this point, the ad breached CAP Code (Edition 12) rules  3.1 3.1 Marketing communications must not materially mislead or be likely to do so.  and  3.3 3.3 Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.
Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.
 (Misleading advertising) and  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).

2.  Upheld

We noted the claim "save 90% with TransferWise" was an absolute claim.  We understood, however, that it was based on TransferWise calculations, which they had explained indicated that customers would save approximately 90% with them. We understood that those calculations were based on a comparison of the fees of five providers and the 90% figure derived was an average of the result.  We considered, however, that given the absolute nature of the claim, insufficient data had been collected to support such a definite statement, had the resulting figure been exactly 90%.

In addition, we understood that the saving was based on transfers of over £200.  We considered that this was material information, a significant condition that was likely to influence consumers' understanding of the TransferWise service offered and inform about the basis of the advertised saving.

We concluded that the claim "save 90% with TransferWise" had not been substantiated and was likely to mislead.

On this point, the ad breached 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) and  3.38 3.38 Marketing communications that include a comparison with an unidentifiable competitor must not mislead, or be likely to mislead, the consumer. The elements of the comparison must not be selected to give the marketer an unrepresentative advantage.  (Other comparisons).

Action

The ad must not appear again in its current form. We told TransferWise Ltd not to make the claims "Your bank is secretly overcharging you" or "save 90% with TransferWise" unless they held robust documentary evidence to support them.

CAP Code (Edition 12)

3.1     3.3     3.38     3.7    


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