Q4 2023 – legal, regulatory and other advertising related developments

We consider the legal, regulatory and other advertising related developments from this quarter, with the most recent developments first. For a round-up of developments this year, see our article here.

ASA publishes five-year strategy for AI-assisted ad regulation

The ASA has launched its new five-year strategy for AI-assisted collective ad regulation. This is the ASA's system of using AI to help identify potentially problematic ads and support its compliance work. The ASA gives the example of having successfully trialled a world-first pilot scheme focused on platform and intermediary transparency and accountability as well as work on green claims. 

The ASA says that over the next five years it plans to invest more in its preventative and proactive work than on its reactive complaints casework. It will focus on resolving investigations more quickly and on preventing irresponsible ads appearing in the first place. There will be a significant scaling up of active ad monitoring using AI support.

Online Advertising Taskforce publishes action plan

The government’s Online Advertising Programme is reviewing the regulatory framework for paid-for online advertising, with a focus on illegal advertising and the inappropriate exposure of children to adverts for products and services illegal to be sold to them. The government has already undertaken a consultation and set up an Online Advertising Taskforce to bring together industry and government to drive non-legislative action. Legislation will follow. 

The Taskforce has now published its action plan. It sets out how the Taskforce will work with the advertising industry, regulators and relevant government departments to understand and improve the evidence around the in-scope harms, and to identify ways to enhance voluntary initiatives or standards to tackle them, as well as to develop new standards where gaps are identified.  

The Plan states that DCMS will publish a further consultation on the Online Advertising Programme policy package and carry out research on online users' experience of advertising harms. The ASA and StopScams UK will also undertake and publish research. There are plans to evaluate the Platform Principles Pilot (discussed further below), as well as proposals to raise existing industry standards and improve diligence around issues such as age assurance, influencer marketing and age-restricted product ads.

CAP announces updated guidance on green disposal ads

The ASA has announced its key findings from its consumer research and issue-led review on green disposal claims. To accompany this, CAP has updated its advertising guidance on misleading green claims to include green disposal claims.

The updated guidance clarifies that green disposal claims must be substantiated and provides guidance on the types of information that should be included to not mislead:

• which parts of a product the claim relates to
• the disposal process, if that is likely to differ from the average consumer’s expectations
• how long it takes for a product to fully biodegrade or compost, if that is likely to differ from the average consumer’s expectations
• any harmful by-products which are produced during the disposal process.

From January 2024, the ASA will begin additional monitoring to tackle ads in breach of previously established positions. From 1 April 2024, the ASA will proactively investigate problematic claims with an emphasis on claims:

• that omit end of use green disposal information where such information is material to the effective and responsible disposal of the item 
• that suggest a product has multiple green disposal options where that is misleading
• lacking in substantiation.

Digital Markets Competition and Consumers Bill progressing through House of Lords

The revised Digital Markets, Competition and Consumers Bill has had its first reading in the House of Lords. Among other things, the Bill will impose additional obligations on providers of subscription services (article here) and introduce additional rights for consumers as regards unfair commercial practices (article here). A House of Lords Library briefing paper has also been published, setting out some of the background to and reasons for the Bill. 

Government consults on 'super-complaints' under the Online Safety Act

On 16 November 2023, the UK government opened a consultation on a 'super-complaints' process that will be established under the Online Safety Act (the OSA), which received Royal Assent on 26 October 2023. The process will allow "eligible entities" to raise concerns to OFCOM, about systematic issues that arise across services, or in exceptional circumstances on one service. The process could be used in respect of fraudulent advertising on regulated Category 1 and 2 services. 

The consultation asks for views on the criteria for an "eligible entity", the conditions for making super complaints, and expectations on how OFCOM should respond to super complaints. It closes on 11 January 2024. Ofcom has not yet consulted on the fraudulent advertising provisions in the Act. More on the OSA here.

CMA seeks undertakings from Wowcher relating to dark patterns

The CMA has announced that it is seeking undertakings from Wowcher to address Wowcher's use of countdown timers and other urgency marketing tools, hidden charges and pre-ticked boxes that enrol consumers into VIP membership. It follows the publication by the CMA in March 2023 of an open letter to online businesses with examples of dark patterns that breach consumer protection law, as well as similar enforcement action against Emma Sleep and others (more here).

BCAP and CAP announce changes to rules on marketing alcohol alternative products

BCAP and CAP have announced changes to their codes for marketing alcohol alternative products (products with an ABV at or below 0.5%, marketed as alcohol alternatives). The changes, which will come into effect on 14 May 2024, alongside new guidance, include the following:  

• Marketing of alcohol alternatives must avoid the indirect promotion of alcohol, failing which it will be subject to the rules around promoting alcohol including the rules on placement and scheduling.  
• It must be clear that products are alternatives to alcohol and marketing must not encourage or condone drinking alcohol in circumstances where it would be inappropriate or unsafe. Likewise, it must not condone heavy drinking generally. 
• Adverts for alcohol alternatives must not be targeted at under-18s and must not be likely to appeal to them (for example, by association with youth culture or by featuring someone who appears to be under 25).

Automated Vehicles Bill proposed

The Automated Vehicles Bill (set out on 7 November 2023 in the Kings Speech) was proposed to ensure the safe deployment of self-driving vehicles.

Among other things, the Bill proposes to prohibit misleading marketing around self-driving cars.

IPA and ISBA publish principles on the use of generative AI in advertising

The Institute of Practitioners in Advertising (IPA) and the Incorporated Society of British Advertisers (ISBA) have published twelve guiding principles for agencies and advertisers on the use of generative AI in advertising. 

The principles are designed to ensure that the industry embraces AI in an ethical way that protects both consumers and those working in the creative sector. They cover issues around transparency, intellectual property rights, human oversight and more. The principles are not exhaustive and apply only to the creative process. 

European Commission and consumer authorities investigate influencers

The European Commission and national authorities of the Consumer Protection Cooperation Network have announced that they will screen online posts "in the coming weeks" to identify testimonials and endorsements that mislead consumers. The results will feed into the Digital Fairness fitness check that helps assess whether new legislation is necessary to make digital markets as safe as offline markets. Meanwhile, the European Commission has also launched an Influencer Legal Hub to allow influencers and content creators to find information on EU legislation regarding fair commercial practices.

CMA responds to DBT's consultation on price transparency

• Standardising unit pricing. The CMA agrees that there should be consistent unit pricing measurements for comparable products and that retailers should be required to display the promotional unit price for all products offered for sale to consumers on promotion, wherever practical.
• Tackling hidden fees and drip pricing. The CMA considers that there should be a specific banned practice on the drip pricing of all mandatory elements as well as other charges which are ‘optional’ but which it is reasonably foreseeable that most consumers would pay. Genuinely optional extras which are part of the purchasing process should be prominently and fully disclosed with the headline price.
• Drafting the fake reviews ban. The CMA supports the government's proposals to ban fake reviews.
• Consumer redress for unfair practices. The CMA considers that consumers should be given a right of redress and that there are no good arguments for restricting this.
• Reforming professional diligence requirements for online platforms. The CMA considers that, when online platforms publish, provide access to, or facilitate content originating from third parties, professional diligence requires operators to take or use reasonable, proportionate and effective measures, including proactive measures, to tackle economically harmful illegal content. The CMA sets out some example measures. 

For more on this consultation, see our article here.

ASA guidance on recycling claims

The ASA has published guidance on recycling claims, explaining that marketers should ensure they have sufficient evidence for making recycling claims and that products are capable of being recycled when making such claims. 

UK government consults on youth vaping and smoking and ASA publishes guidance

The government has consulted on its proposed restrictions on the sale and marketing of vape products to children and on the creation of a 'smoke free generation' (as announced on 4 October 2023). The consultation has now closed. The proposals include restrictions on branding, packaging, point of sale, disposable vapes, and banning the sale of non-nicotine vapes to under 18s.  

Following the launch of the consultation, the ASA has published guidance on how to ensure e-cigarette ads are compliant with advertising law. The guidance includes caution around 'stop smoking claims', not using under 25s in ads, and not encouraging non-smokers to take up e-cigarettes. This follows the issue of an enforcement notice by CAP instructing vaping companies to adhere to established advertising regulations (more here). 

ECJ issues preliminary ruling on auto-renewing subscription contracts

The European Court of Justice (ECJ) has issued a preliminary ruling on consumers' rights to withdraw from auto-renewing subscription contracts under the Consumer Rights Directive.

The CRD gives consumers 14 days to withdraw from distance or off-premises contracts. The ECJ considered whether a consumer has a new right of withdrawal when a contract converts from free trial to paid-for subscription and each time it auto-renews.

The ECJ ruled that the right to withdraw only arises once, at the start of the free trial, provided that the consumer is given clear pre-contract information that payments are required after the trial. If the consumer has not been clearly informed, pre-contract, that payments will follow the initial free period, the consumer will have a new right of withdrawal after that period.

In the UK, the CRD right to withdraw was implemented in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013/3134. UK courts may have regard to ECJ decisions. This decision will therefore be of interest to UK businesses entering into subscription contracts with both UK and EU consumers. However, UK consumers are set to receive enhanced withdrawal rights under the Digital Markets, Competition and Consumers Bill (when passed).

ASA publishes final report on intermediary and platforms principles project

The ASA has published its final report on its Intermediary and Platform Principles pilot in which it worked with ten of the largest digital advertising companies to promote awareness of, and compliance with, online advertising standards. The pilot was devised to help explore whether and, if so, how the UK advertising self-regulatory system might evolve to bring greater transparency and broader accountability to its work online. 

The report concludes that the participating companies supported the ASA to raise awareness of the advertising rules online and remove ads that were persistently non-compliant. The report will be reviewed (as part of the government's Online Advertising Programme - see above) by the ASA, industry and other stakeholders to evaluate where gaps exist. 

ASA guidance on Christmas themed ads

The ASA has published guidance on Christmas themed ads.

CAP and BCAP publish update on review of use of digitally altered body images in advertising

CAP and BCAP have published an updated statement on their review into the use of digitally altered images in advertising. This follows an interim statement published in 2022, setting out three policy areas for further enquiry arising from their evaluation of the responses received to the open call for evidence in 2021. The update includes the following next steps CAP and BCAP have taken/are taking, on this strand of their body image in advertising review: 

• To resolve, by Spring 2024, whether the existing protections in the Codes and guidance adequately address the potential harms arising from digitally altered body parts and proportions depicted in advertising.
• To convene a roundtable involving children and young people to help inform CAP and BCAP’s assessment above. To that end, CAP and BCAP hosted a youth roundtable in October 2023, and will report their findings from this action in full in Spring 2024.
• To engage with members of the advertising industry to facilitate any wider considerations of industry initiatives intended to address potential harms arising from digitally altered body parts and proportions depicted in advertising.

CAP and BCAP intend to publish the full outcome of their body image in advertising review in spring 2024.

ASA issues enforcement notice on advertising whisky cask investments

Following two ASA rulings in Blackford Casks Ltd and London Cask Co Ltd, the ASA has issued an Enforcement Notice to ensure ads for whisky cask investments comply with the rules. The ASA says that consumers are unlikely to have experience of understanding whisky cask investments, and because the whisky cask investment market is not regulated in the UK, consumers will not be afforded the same financial protections compared to a regulated financial product. The ASA Compliance team will start targeted monitoring of these ads from 2 January 2023. 

BEUC announces "greenwashing" complaint against major water bottle traders

BEUC (the umbrella organisation for European consumer groups) has announced that it has filed a complaint against major water bottle traders, including Coca-Cola, Danone and Nestlé, to the European Commission for misleading green claims about the recyclability of their products. Its action is being taken alongside consumer protection authorities from 13 EU countries.

ASA issues update on scam ads alert

The Scam Ad Alert system helps the ASA tackle scam ads online. The ASA has issued an update on trends observed from the scam ads that have been brought to its attention and the impact of the Alert system over the last year. The ASA update says that scams featuring celebrities (including deepfakes) continue to dominate, as well as scams that capitalise on current events (such as the collapse of the retailer Wilko or the cost of living crisis). 

FCA takes over regulation of technical claims in ads for cryptoassets in non-broadcast media from ASA

Following the introduction of new rules by the FCA, the ASA will no longer regulate technical claims in ads for qualifying cryptoassets in non-broadcast media. The FCA took over responsibility for such claims in October 2023. "Qualifying cryptoassets" are cryptoassets that are transferable and fungible, including cryptocurrencies and utility (fan) tokens.  The terms does not include cryptoassets that are non-fungible, such as Non-Fungible Tokens (NFTs), or Limited Payment Tokens.

Ofcom says no changes – yet - to advertising rules for public service broadcasters