A recent ASA decision has considered when retailers can list products using RRPs.
What evidence does the ASA require to substantiate that an RRP is a genuine price in the market?
The ASA has upheld complaints against two ads for a car purchasing platform on the basis that:
references to RRP did not reflect the price at which the relevant vehicle was generally sold; and
average savings claims were calculated using RRPs that again the relevant vehicle was not generally sold at.
The decision is a useful reminder to retailers who rely on RRPs to show pricing savings that they cannot rely on a manufacturer's price list alone, or indeed pricing from a manufacturer's own website, to demonstrate that a price used for an RRP is a price “generally” available in the market.
Retailers must also hold wider market substantiation otherwise the RRP will likely be considered misleading.
Why is this important for retailers?
RRPs are a popular way for retailers to show significant price savings on their products. The case highlights just how much care is needed to evidence an RRP, remembering that a failure to comply is not just a breach of the CAP Code but also of the core consumer legislation (the Consumer Protection from Unfair Trading Regulations 2008).
The price comparison website www.carwow.co.uk, featured a listing for a Ford Mondeo with an “RRP” of £24,195 (the Web Ad). A complainant challenged whether the RRP was misleading, on the basis that Ford’s website listed the same car with a lower RRP of £23,590. Carwow’s TV ad, featured the claim that “buyers save an average £3,600”, with “savings against RRP” (the TV Ad). A different complainant challenged whether the savings claims made by Carwow could be substantiated, or were in fact, misleading.
In respect of the Web Ad, Carwow argued that its RRPs were gathered from CAP HPI, a third party which gathered and analysed data from numerous industry sources (including vehicle manufacturers and the DVLA). Carwow also confirmed that, following a separate complaint regarding the RRP of the Ford Mondeo, it had received confirmation from Ford that the RRP listed on Ford’s own website was out of date and related to a previous model of the Mondeo. Carwow argued that it had based its RRP on CAP HPI’s data which was in date, and related to the most recent Mondeo model. Ford had supplied this up to date pricing data to CAP HPI, but had failed to update its own website.
In respect of the TV Ad, Carwow provided evidence that its website explained that savings data was calculated as against “the Manufacturer’s [RRP] for the model”. Clearcast also confirmed that Carwow had provided spreadsheet data to substantiate its savings claim, which showed that across 2017, and the first half of 2018, the average amount consumers saved using Carwow was just under £4,000 across 64,927 sales through the website.
The ASA's decision
Regarding the Web Ad, the ASA acknowledged that the RRP had been provided by CAP HPI, and had been stated in error as a result of an old price being listed on the manufacturer’s website. However, the ASA did not consider that the price on the manufacturer’s website would necessarily represent the price at which the vehicle was generally sold across the market. As the ASA had not seen sufficient evidence to demonstrate that the RRP stated by Carwow did not differ significantly from the price at which the Mondeo was generally sold, the RRP was considered to be misleading and in breach of CAP Code rules 3.1 (Misleading Advertising), 3.8 (Substantiation) and 3.40 (Price comparisons).
Regarding the TV Ad, the ASA acknowledged that the information provided to Clearcast showed that savings made by consumers against manufacturers’ RRPs were above the average used in the ad. However, it noted that it had not seen any evidence to show that the RRPs used in calculating the average represented anything other than the manufacturer’s selling prices for the vehicles concerned.
As the ASA had not seen sufficient evidence to demonstrate that the RRPs did not differ significantly from the price at which the vehicles were generally sold, the ASA concluded that the average saving of £3,600 quoted had not been substantiated and was misleading. The TV Ad therefore breached the BCAP Code rules (Misleading Advertising), 3.8 (Substantiation) and 3.40 (Price comparisons).