Advertising claims about prices or costs of goods and services.
Advertisers should always perform a careful in-advance check of the statements contained in their promotional messages. Any factor capable of impacting on the price or involving additional costs of the promoted product must result absolutely clear and immediately perceivable by the targeted public. Regulators will have no mercy misleading or unclear claims.
Misleading or unclear statements
Advertisers are always well advised to carefully consider the claims made in promotional messages and to pay great attention to the potentially sensitive areas which their commercial communication could be touching on.
Recently, the Italian Advertising Self-Regulation system as well as Regulatory Authorities have been noticed to be often cracking down on claims or statements with a potential to convey unclear or misleading messages as to hidden costs, (not sufficiently transparent) price indications or unfair comparison.
Advertised prices and limited offers.
The Italian subsidiaries of a German and US manufacturer found themselves in the line of fire for ambiguous indications displayed in advertising with respect to the prices of some of their car models. The Italian Market and Competition Commissioner (in charge of sanctioning misleading advertising) took issue with the fact that the showed (and convenient) purchase price did not make clear that the offer was limited to customers willing to undergo a specific loan agreement (through which the advertised base price resulted significantly increased).
The Commissioner served each of the two car manufacturers with a fine of 400.000 Euro, considering that they had used the announced convenient price as a honey trap to lure customers into purchase, while such price did not result to be available.
For an identically illegal practice the Commissioner had fined (for Euro 300.000) a French car manufacturer’s local subsidiary a few months earlier. In such case, the fact that the convenient price was available only to subscribers of a loan agreement, had been mentioned, but just through an asterisk and a foot note in small print.
For reasons of fairness it must be said that an Italian manufacturer had its advertising questioned in Austria, where a Court in Vienna took issue with a promotional message saying that customers buying a city car would start paying the purchase price not at once, but only after 500 days. Unfortunately, the commercial failed to clarify that such payment delay would imply a cost of Euro 200. In the Court’s view, the – lacking – cost indication missed to meet customer’s expectations and was held as misleading advertising.
Advertising for Internet connection plans.
Providers of Internet services also run often into trouble with their advertised connection plans. A few weeks back, one of those providers offered an Internet connection under the following headlines: “What you see is what you pay” – “No surprises, no hidden costs, no minimum duration for your subscription period”. The message omitted to mention that there was a 15 Euro first charge and a 5 Euro contribution for activating the SIM card. Hence, the Jury of the Advertising Self-Regulation held the promotional messages as misleading.
Ads capable of denigrating competitors.
One of the oldest banks in Europe – founded in the Middle Ages in Siena, a town in the Region of Tuscany in Italy – got into heavy trouble in the context of the derivative’s speculative bubble burst. The bank barely avoided bankruptcy struggled over recent years and had to face lawsuits from customers disappointed with several of the financial products offered with significant hype, but simply collapsed in the aftermath.
The bank’s business name is – and had been for centuries - “Monte dei Paschi di Siena - MPS”, which translates into English as “The Mountains of Pastures” of the city of Siena. In technical – legal – terms a “Monte” (Mountain) was also a legal entity overseeing and administering the pasture rents (in the past usually offered as guarantee for loans). This latter - technical - meaning stays behind the bank’s business name.
After the bank went into trouble, a competitor thought to take advantage of such difficulties and to lure away some of the customers running an outdoor advertising campaign under the headline: “The Mountain collapsed, take shelter with us”.
MPS filed a complaint with the Italian Advertising Self-Regulation Organization (IAP) and obtained a cease and desist decision from the SRO’s Jury, which considered that the ad as incorrect and denigrating.
The take away.
When conceiving their commercial communication, advertisers need to really pay proper attention, not just to what they say in their promotional statements, but also to how they draft and place their campaign messages.