Advertising special offers at Christmas

David Parkin, a partner at Berwin Leighton Paisner and head of its commercial/corporate litigation group, examines the pitfalls surrounding advertising special offers

The problem

Claude Francis runs a hotel in Norfolk. To encourage more business, he put an offer on the Internet advertising rooms for half-price over the Christmas weekend. Unknown to him, his receptionist had taken a large group booking the previous day. After seeing the advert, a customer tried to book a de luxe room but was told that the offer was only for standard rooms, all of which had, by then, been booked. The customer wrote to Francis stating he was considering complaining about the advert.

What the law says

Under the Trade Descriptions Act 1968, it is a criminal offence to apply a false or misleading description to any goods or services. A description is false if it is untrue to a material degree, whereas a description is misleading even if, while true at face value, it will mislead the consumer by implication.

The British Codes of Advertising and Sales Promotion also need to be considered. Although there is no duty to comply with the codes, they operate side by side with the law and are enforced strictly by the Advertising Standards Authority (ASA). They apply to all written advertisements in printed or electronic form, and therefore cover Internet adverts as well.

Their general principles state that:

• Adverts must be legal, decent and honest.
• Adverts should not exploit the lack of knowledge of customers, mislead them, and be inaccurate or ambiguous.
• Prices should be clear and relate to the product advertised.
• The advert must make it known if stocks are limited, and an advertiser must be able to show that he has reasonable grounds to believe that he can satisfy demand.
• Any limitations on the offer should be clearly stated.

The expert's advice

If the customer reports the matter to his local trading standards officer (TSO)or the ASA, Francis could face a number of problems.

First, Francis can expect a visit from the TSO to establish how many bookings he had already received and the type of rooms that were available at half-price. Even if the TSO decides that no offence has occurred, he might refer the matter to the ASA.

The advert is also problematic under the ASAcodes because it does not state that rooms are limited in number. It will also be difficult for Francis to prove that he reasonably believed he could satisfy demand generated by the advert, as the hotel was fully booked.

Francis should withdraw the advert at once. If he still wants to run the offer, he should amend it so that it relates to standard rooms only and state that such space is limited. Further, the offer must run on a weekend when those rooms are available. In addition, if anyone tries to make a booking from the original advert, Francis should offer the de luxe rooms at half-price.

Beware!

Under the Trade Descriptions Act, issuing false or misleading descriptions of goods or services can carry a £5,000 fine and/or imprisonment for two years. This is a criminal offence and, as such, a conviction will result in the advertiser having a criminal record.

Although there is no monetary sanction if the ASAcodes are breached, all adjudications are made public and are often reported by the press. This type of sanction can have more serious and longer-lasting effects on a business.

Checklist

To avoid problems when writing an advert, try to follow this checklist:

• The advert must be completely accurate and make clear any limitations to the offer - for example, time periods and the type of goods or services being offered.
• Do not exaggerate the offer.
• The advertiser must be able to satisfy demand in relation to the offer.
• The price should be stated clearly.

Contacts

Berwin Leighton Paisner
020 7353 0299
Advertising Standards Authority Copy Advice Team
020 7580 4100