Marketers must make sure they’re clued up about what they can and can’t say when promoting their brand. Ellen Forrest-Charde, partner at Squire, Sanders & Dempsey LLP, examines the common pitfalls
Marketing in a competitive world means pushing boundaries. However, recent years have seen a move towards more regulation of advertising and this brings increased legal risks for advertisers. One area that advertisers need to be aware of is the increased regulation of misleading advertising.
The Business Protection from Misleading Marketing Regulations (BPRs) were specifically designed to criminalise misleading advertising (regulation 3) and comparisons made in a subjective and derogatory way (regulation 4). This includes online, as well as verbal, statements. However, it may not be immediately identifiable to businesses what constitutes advertising.
While the BPRs have been in force since 2008, until the recent case of London Borough of Croydon versus Austin Hogarth & Ors (summarised below) they had not been tested in court.
Misleading advertising
Advertising is misleading if it “in any way, including its presentation, deceives or is likely to deceive the traders to whom it is addressed or to whom it reaches and by reason of its deceptive nature is likely to affect their economic behaviour.” Common examples of misleading advertising include:
• Exaggerated claims/hyperbole (e.g. “Our printers print a million pages a minute.”) Marketers should make it clear that such claims are not meant to be relied on.
• Failure to describe the significant limitations of a product (e.g. “We supply catering equipment free of charge” where there is an additional charge for labour and installation.) Marketers should ensure that significant limitations are stated with sufficient legibility and as near as possible to the claim they aim to qualify.
• Historical advertising. A claim may become misleading after a period of time. Marketers should take care to ensure marketing materials are up to date and historical advertising is withdrawn from the marketplace. While the majority of ethical marketers will not fall foul of the misleading advertising prohibition, regulation 4 – which prohibits unfair comparisons with other traders’ products – creates a grey area. An advertisement that compares a product, service or business with that of another trader, does not require the advertisement to explicitly name the other trader or the product. An oblique reference to a type of product will suffice. Therefore, it may not be immediately clear whether an advertisement is comparative or not.
Common examples of comparisons that might fall foul of the BPRs include:
• Comparisons that use out-of-date or incomplete material (e.g. “Forty per cent of our customers say that our brand of software is 10 times more responsive than X’s” when the percentage dates back to studies from 2001 or when the claim is only in relation to certain product ranges.) Marketers can avoid this confusion by citing the research, who conducted it, and when and with what participant sample.
• Comparisons that cannot be easily justified. Marketers should take reasonable precautions and compile objective evidence when making a claim. If relying on evidence from a third party, the name of the third party who supplied the evidence should be retained.
• Comparisons with non-equivalent products. Marketers should compare ‘like with like’. If dissimilar products have been compared it should be highlighted.
• Comparisons using trade marks of other businesses in a derogatory way – or a way that reaps the benefit of another trade mark’s reputation. Such acts could also constitute a trade mark infringement. Marketers should avoid the use of other trade marks unless they have sought legal advice.
Sanctions & penalties
In contrast to the largely reputational sanctions for misleading advertising under the Advertising Codes administered by the Advertising Standards Authority, violation of the BPRs is a criminal offence that could result in a £5000 fine or two years’ imprisonment.
In other circumstances, the Office of Fair Trading (OFT), which is the primary enforcer of the BPRs, may simply require undertakings. The OFT may consider the cooperation of the individual in any investigation and the persistence or gravity of the offence when deciding to prosecute.
In London Borough of Croydon versus Austin Hogarth & Ors (2011), a local authority successfully obtained an injunction against a number of individuals who were working in the business of servicing printers, faxes and other machines. The respondents had sent an invoice (which was actually a contract) to the applicant for service of faxes. The invoice was held to be a misleading advertisement. Although it did not promote the respondent’s service per se, it did promote the business and generated further business by making the recipient of the invoice believe that it had a business relationship with the sender.
The decision illustrates the point that nearly any document that promotes a product/service is considered advertising but it must be said that it was a fairly obvious scam and the decision itself does not provide much insight into how the courts will interpret deceptiveness.
BPRs may be used quite effectively as a weapon to challenge competitors’ claims in their marketing. While there is no direct right for a trader to take action in the courts against another trader in violation of the BPRs, traders can ‘tip off’ the OFT.
