9 April 2020
Brands update - April 2020 – 5 of 8 Insights
The UK's advertising regulator (the ASA) and consumer protection regulator (CMA) are cracking down on businesses and people who are inflating the prices of products such as hand sanitiser, toilet roll, food, and medicines, or making misleading or socially irresponsible marketing claims about products such as face masks.
The UK's Advertising Standards Authority has announced that it will be more lenient and tolerant towards most advertisers during the crisis. This followed the Chancellor's reference to "possible regulatory forbearance" to support businesses during this challenging time. However, the ASA will take a tough stance against any unfair advertising relating to or taking advantage of the COVID-19 crisis.
This means that, during the crisis, the ASA is likely to be more lenient on advertisers where, for example:
The ASA will therefore likely reduce its regulatory interventions to a minimum for businesses facing an existential threat – for example, travel, hospitality, bars, restaurants, sports and other event providers, and certain retailers who have been forced to close. On the other hand, rogue traders, rip-off merchants and profiteers will not likely experience any forgiveness at this time.
Advertisers who deliberately or innocently exploit the coronavirus pandemic are likely to meet an "uncompromising stance" from the ASA. The ASA has committed to acting "quickly and robustly" against such ads. For example, ads that:
The ASA refers to two examples.
In the first, Novads OU advertised online in February 2020 that its "New Nano Tech Face Mask is Selling Out Fast in the United Kingdom". In some ads, it referred to the WHO's declaration of a "global health emergency", the death toll, a "growing sense of panic" and/or that the OxyBreath Pro mask was "one of the best ways to protect yourself…from: virus, bateria [sic] and other air pollutants", and was of better quality and offered higher levels of protection than other masks. The advertiser did not respond to the ASA's inquiries. The complaint was unsurprisingly upheld.
The second case was about a newspaper ad for Vick Smiths Beds in February 2020 which included a cartoon of an upright mattress with a Union Jack on the front, which was wearing a surgical mask. The text stated "BRITISH BUILD [sic] BEDS PROUDLY MADE IN THE UK. NO NASTY IMPORTS". Despite the advertiser saying it would not repeat the ad and did not intend to cause offence, the ASA upheld the complaint on the grounds that it was likely to cause serious and widespread offence.
Noting that there had been reports that Asian individuals had been abused in relation to coronavirus fears, the ASA ruled that the combination of the Union Jack, surgical mask and "NO NASTY IMPORTS" was likely to be read as associating immigration or race with coronavirus. Given that the advertiser (and the newspaper) had said that they will not repeat the ad, this could be an example of the ASA getting tough by not allowing the complaint to be resolved informally.
The Competition & Markets Authority has also announced concerns about unfair business practices. The CMA enforces, amongst other things the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008. Its powers can cover not only traditional businesses, but also online marketplaces through which individuals may be selling, for example, high-priced hand sanitiser.
On 4 April 2020, the CMA launched an online service to enable people to report a business behaving unfairly during the Coronavirus outbreak. People can report:
This follows the CMA's announcement that it wants to ensure that traders do not exploit the situation to take advantage of people, for instance, by charging excessive prices or making misleading claims (eg about the efficacy of protective equipment). The Chief Executive said:
"We urge retailers to behave responsibly throughout the coronavirus outbreak and not to make misleading claims or charge vastly inflated prices. We also remind members of the public that these obligations may apply to them too if they resell goods, for example on online marketplaces."
On 20 March, the CMA wrote an open letter for businesses in the pharmaceutical and food industries. This includes that they:
"…have received reports that a minority of firms in your sector are seeking to capitalise on the current situation by charging unjustifiably high prices for essential goods or making misleading claims around their efficacy…If appropriate, the CMA has recourse to a range of competition and consumer powers to tackle bad behaviour. It is therefore vital that any poor behaviour is nipped in the bud now and we will use all of the powers available to us to ensure that markets continue to work well during the coronavirus outbreak."
Pre-empting an explanation that prices need to increase because suppliers higher up the chain have increased their prices, the CMA says:
"…where this is happening, we would like to hear from you about any information relating to such price increases by wholesalers or suppliers, so that we can investigate these issues further up the supply chain. Please send any such information in writing to firstname.lastname@example.org."
Whether stuck at home or selflessly working to provide the public with essential services (such as the NHS), many consumers may be facing considerable financial and other challenges, and have fears for the future. When shopping, they may be looking for the cheapest deals, or anything which can help protect them from the virus.
Traders need to be very sensitive to the times we live in. If a business tries to exploit the COVID-19 crisis, it is likely to receive short shrift from regulators, as well as risk reputational damage.
by Simon Jupp