Why CMA, What Large Teeth you (Could) Have! Take Care to Heed the ASA and CMA’s Warnings Against Misleading Advertising
In the UK, we have seen an increase in regulator activism, and particularly, in relation to advertising misleading consumers. This can be seen in the recent spate of the UK Competition and Markets Authority (“CMA”) investigations and a whole host of the UK Advertising Standards Authority (“ASA”) decisions. Companies will need to take extra care as the CMA may get some (very large) new teeth from the Digital Markets, Competition and Consumer Bill (“Bill”).
Consumer protection has, for the most part, somewhat lacked enforcement powers, but with the Bill and the CMA’s new powers, advertisers should take heed of ASA decisions as cautionary tales for future CMA investigations. The ASA long-warned companies against greenwashing and the CMA has now launched greenwashing investigations in both the fast fashion sector and the fast-moving consumer goods sector (e.g.as food and drink, household cleaning products, homecare products and self-care products).
The Bill
The long-awaited reform of UK consumer law will take shape by way of the Bill, which is expected to be the most significant development in this area in years. In addition to enshrining the UK government’s digital markets strategy, the Bill will also have an impact on the UK’s competition and consumer legal frameworks. For example, subscription traps, online fake reviews and fictional savings schemes are just some of the issues targeted. However, most important to note is the fact that the Bill will also allow the CMA to impose steep fines of up to 10% of the global turnover for non-compliance with consumer laws.
In practice, this could even lead to penalties for misleading advertising, such as greenwashing, if such activities are serious enough to amount to a breach of the Consumer Protection Regulations 2008.
The Bill is to be put before Parliament in Spring 2023, however, an exact date is yet to be announced. The Government aims to enact this piece of legislation by October 2023, which means the Bill may become effective by the end of this year.
The latest ASA cautionary tale – money and energy saving claims
In response to cost-of-living crisis, the ASA has warned companies against attempting to profit off the public’s cost consciousness by making claims on reducing energy bills in order to sell their products and services. In no fewer than four separate rulings, the ASA banned adverts promoting mini heaters as a cheaper alternative to regular heating for being misleading. The ASA took into consideration expert evidence of the Energy Saving Trust when reaching its conclusions, which indicates the high level of substantiation the ASA will expect from advertisers making savings claims.
The ASA subsequently issued guidance to advertisers highlighting the importance of ensuring the accuracy of their claims. The ASA recognised that companies may be tempted to use current customer concerns around energy bills to their advantage when creating marketing strategies, but warned that they will remain vigilant in assessing the accuracy of the claims made, particularly given the sensitivities around the cost-of-living.
Craft adverts carefully and avoid the regulators’ teeth
All companies must ensure that their advertising does not mislead consumers. The recent regulator activism further increases the importance of carefully crafting advertisements to avoid risking the regulators’ wrath and losing customer trust.
Just remember to stick to the basics:
- if you can’t prove it, it is best not to claim it;
- avoid using vague or broad statements without clarification, such as ‘sustainable’, ‘better for the environment’, ‘cost-saving’ as these are difficult to substantiate;
- only make specific, accurate statements that are strongly supported with evidence; and
- be careful when comparing against other products or competitors. In particular, avoid denigrating another brand or product or making a comparison that is not like for like.
In light of the current spotlight on consumer protection and with the Bill likely to come into effect by the end of 2023, it is essential that companies carefully assess their advertising to ensure it is compliant, most particularly if those claims relate to energy or money saving and the environment.