Updated CAP Code

1 July, 2008

Following the implementation of The Consumer Protection from Unfair Trading Regulations 2008 on 26th May 2008 (‘Regulations’), the British Committee on Advertising Practice (’BCAP’) has made changes to the British Code on Advertising, Sales Promotion and Direct Marketing (‘Cap Code’) to bring it into line with the Regulations and provide industry guidance on their application. Agencies and advertisers will need to be mindful of the changes brought in by the Cap Code.

The Regulations have provided the biggest change in consumer legislation in the last 30 years, and the Cap Code has had to be considerably amended to reflect this. The Cap Code regulates non-broadcast advertising in the UK and has had effect since 24 June 2008.

The Cap Code has been extended to cover the prohibition of the following unfair commercial practices set out in the Regulations:

  • Contravening requirements of professional diligence;
  • Misleading actions;
  • Misleading omissions;
  • Aggressive commercial practices; and Inherently unfair practices.

The Cap Code now also includes the prohibition of the 31 inherently unfair practices listed in the Regulations. Amendments have been made to the Cap Code to refer to the Regulations themselves, and how they will be applied by the ASA. The main changes to the previous code are as follows:

Truthfulness

One of the most substantial changes to the Cap Code has been to rule 7, in order to include the Regulations’ prohibition of misleading actions and omissions. The change provides that marketing communication ‘…must not omit, hide or provide in an unclear, unintelligible, ambiguous or untimely manner, material information…’

The test for determining the material nature of the information is whether it is likely, in its presentation or omission, to affect a customer’s decision about whether or how to buy the advertised product. The Cap Code now also includes a long but non-exhaustive list of information that is material, and should therefore be included, in advertisements for products marketed with quoted prices. This list includes the main characteristics of the product, the identity and geographic address of the trader or marketer, the price, taxes and delivery charges for the product, and arrangements for payment, delivery, performance or complaint handling, if the arrangements for complaint handling differ from those that consumers are likely to reasonably expect.

Availability of Products

Rule 16 has been substantially changed to comply with the provisions in the Regulations on the availability of products. These include putting an onus on an advertiser of a product to have reasonable grounds to believe that it has sufficient products available to satisfy demand for the product being advertised and prohibiting the making of false claims about the time limits that an offer is available for, or that the manufacturer is going to cease trading or move premises.

Free Offers

New rule 32.5 (replacing what was rule 32.1) states that a consumer’s liability for costs in ‘free offers’ should be made clear (i.e. the telephone call, delivery or collection costs) in all materials relating to the free offer and that such costs should cover the minimum unavoidable costs of responding to the promotion, such as normal-rate telephone calls and the true cost of delivery or collection of the item being offered free. Promoters should not charge for packing, handling or administration. It should be noted that the previous wording which specifically allowed for free offers conditionally upon buying other items has been deleted, thus drawing into question the legality of Buy One Get One Free offers (‘BOGOF’). The practice of offering BOGOFs is not specifically prohibited under the revised Cap Code, but the specific permission itself has been removed. Having said this, the June 2008 issue of CAP’s newsletter does state that “…fears that [the Regulations] will restrict certain long established practices such as Buy One Get One Free and other free offers are premature because these types of offer are still permitted by the Code.” Notwithstanding CAP’s view it remains to be seen how the ASA will approach BOGOFs in the future.

Other changes

Changes or new rules have also been made to the following:

  • Rule 4: Legality
  • Rule 9: Fear and Distress
  • Rule 14: Testimonials and endorsements
  • Rule 18: Comparisons with competitors
  • Rule 21: Imitation
  • Rule 22: Recognising marketing and identifying marketers
  • Rule 25: After sales service
  • Rule 35: Prize promotions
  • Rule 39: Trade incentives
  • Rule 42: Distance selling
  • Rule 43: Database practice
  • Rule 47: Advertising to children
  • Rule 50: Health and beauty products
  • Rule 52: Employment and business opportunities

Conclusion

The Cap Code does not add to the requirements of traders and marketers: it merely incorporates the changes brought about by the Regulations into the Cap Code as a more readily accessible guide to their application. Although it will not be clear for some time how the Regulations and the Cap Code will be operated in practice, businesses who provide or are involved in advertising or marketing to consumers should be taking immediate action to ensure that their activities are not in breach of the new law. There are criminal sanctions for breaches of the Regulations. The new sections of rule 7 in particular have made it much easier to commit a breach of the Cap Code simply by not providing enough information. An unhappy consumer is likely in the first instance to complain to the ASA. If the ASA upholds a complaint against an advertisement, the vast majority of media owners will refuse to run it. The ASA also publishes adverse adjudications on its website which could in turn lead to adverse publicity and loss of consumer confidence for those who are deemed to have transgressed the Regulations. Any breaches of the Cap Code found by the ASA can then also be referred to the Office of Fair Trading, who may take action under the Regulations. The maximum penalties for a breach of the Regulations are unlimited fines and up to 2 years imprisonment.

BCAP is currently consulting on the equivalent changes to its code on TV and radio advertising so that it also will be brought into line with the Regulations. For further information in relation to the Regulations visit: www.crippslaw.com/publications/maunfairtradingregs.

 

Reviewed in 2015