The latest legal, regulatory and other developments in the advertising and consumer adjacent spheres for Q3 2024.

ASA issues guidance on using AI as a marketing term

The Advertising Standards Authority (ASA) has issued guidance on using AI as a marketing term in advertisements. Key points from the ASA guidance include:

• Do not falsely claim AI use. Marketers should not assert that a product features AI if it does not. 

• Do not overstate AI capabilities. Clearly define what features are enabled by AI in your product and how these benefit consumers, with substantiation ready for any performance claims. 

• Substantiate comparative claims. When claiming that an AI product outperforms a non-AI product, ensure robust evidence backs these claims — without adequate proof, such claims should be avoided.

• Understand your responsibility. Marketers cannot deny responsibility for non-compliance by blaming third-party developers or claiming ignorance.

ASA issues guidance on verifying comparisons

The ASA has provided an update on the use of comparisons in advertising and the need for comparisons to be identifiable and verifiable.

Verifiability means ensuring that when advertisements include comparisons with identifiable competitors, there is enough information present for consumers to independently verify the claims made. This requirement applies to all ads with comparative assertions, irrespective of whether they involve price or other quantifiable characteristics, and it extends to both broadcast and non-broadcast media.

• For simple comparisons, such as online price checks between two products on different retailers' websites on a specific date, the ad itself may be easily verified without the need to direct consumers to further information.

• For more complex comparisons, involving technical data or extensive market-wide analyses, advertisers should not only explain the comparison's foundation within the ad but also guide consumers to where full verification details are accessible.

  Advertisers must avoid making comparisons based on commercially sensitive or confidential data unless they are prepared and permitted to disclose this information fully to consumers.

ASA issues guidance on disclosing essential information to avoid misleading consumers

The ASA has published guidance on information that must be shared with consumers to ensure advertisements do not mislead consumers.

The ASA states that it requires all advertisements to provide information to allow consumers to make informed decisions, whether it involves purchasing a product, entering a promotion, or seeking further details. The ASA gives the following examples:

• For environmental claims, the ASA has ruled against ads in the travel, banking and automobile sectors (among others) that fail to fully disclose the negative environmental impact of a business alongside their positive initiatives.

• For travel, the ASA has ruled that headline starting prices such as "From £199..." must clearly communicate any limitations or restrictions that could affect this price availability, such as if the consumer can only get the price by travelling on a Monday or if they bring their family.

The ASA also explains that for promotional marketing, key terms and conditions influencing consumer participation choices are deemed 'significant conditions'. These will almost always include a clear explanation of how to participate, a closing date, the nature and number of prizes or gifts, any restrictions on who can participate, and availability. Omitting these can render a promotion materially misleading.

Recent ASA rulings have clarified that simply signposting or linking to full terms and conditions may be insufficient in ensuring consumers are not misled by omission in advertisements on packaging or social media posts.

EU's Right to Repair Directive published in Official Journal

The Right to Repair Directive was published in the Official Journal on 10 July 2024,  entering into force 20 days later on 30 July 2024.  Member States must transpose the Directive by 31 July 2026.

The Directive will introduce (amongst other things):

• A new right to repair for consumers both within and beyond the legal guarantee period. 

• A requirement on manufacturers to conduct repairs within a reasonable time and (unless the repair is free) for a reasonable price.

• An extended guarantee of one year after a product has been repaired.

• A requirement on manufacturers to publish information about their repair services, including indicative information on the most common repairs.

• Options for consumers to borrow products while theirs are being repaired.

Despite being an EU directive, impacted UK manufacturers will need to appoint an EU representative for repairs or clarify with importers or distributors who will conduct repairs. More here.

PSR and FCA consult on digital wallets

The Payments Systems Regulator (PSR) and Financial Conduct Authority (FCA) have issued a call for information on digital wallets to understand how these services benefit users, any features that may impede optimal payment functionality, their potential to drive account-to-account payment solutions, as well as their impact on competition among payment systems. Additionally, there is a focus on identifying any significant issues related to competition, consumer protection or market integrity that may arise presently or in the future.

The regulators will consider any responses received and provide an update by Q1 2025.

Defra sets out base fees for first year of Extended Producer Responsibility for packaging

The Department for Environment, Food and Rural Affairs (Defra) and the devolved administrations have published illustrative base fees for the first year (2025 – 2026) of Extended Producer Responsibility (EPR) for packaging.

• The Packaging EPR is be introduced under powers in the Environment Act 2021 and aims to ensure producers pay the full net cost of managing their products at end of life to incentivise them to design their products with sustainability in mind.

• The document provides a likely fee range for each of the eight categories of waste packaging material (aluminium, fibre-based composites, paper or board, plastic, steel, wood, glass, and other). These fees are a first estimate and are not final figures. The fees do not include regulator charges or the costs of meeting packaging recycling targets (for example, by purchasing packaging waste recycling notes).

The UK government intends to publish refined figures for the illustrative base fees in September 2024. The packaging EPR regime will start in October 2025 and obligated producers will incur fees from 1 April each year, based on the packaging they have supplied for the preceding calendar year. From the second year of EPR, fees will be modulated to ensure packaging materials that have a lower environmental impact will be the least expensive for producers to use.

EHRC updates guidance on discriminatory advertisements

The Equality and Human Rights Commission (''EHRC'') in Britain has issued updated guidance on discriminatory adverts. It makes clear that:

• An advertisement is considered discriminatory if it explicitly or implicitly restricts access to jobs or services to people with specific protected characteristics eg job titles like "waitress" or "salesgirl," which suggest a gender requirement.

• Language requirements in job ads must also be justifiable. If proficiency in certain languages is not essential, such requirements may be seen as indirect racial discrimination.

• The EHRC has enforcement powers to act against discriminatory adverts even without identified individual victims of discrimination.

Ad and consumer issues form part of the King's Speech 2024

The King's Speech, together with the accompanying briefing notes set out the new government's priorities and proposed legislative programme.  Key proposed legislation includes: 

• Product Safety and Metrology Bill. The Bill will reform the UK's product safety regime to bring it in line with issues surrounding AI, e-bikes and lithium-ion batteries. The Bill will also touch on the role of online marketplaces in product safety.

• AI. Plans including seeking "to establish the most appropriate legislation to place requirements on those working to develop the most powerful AI models”. Details of what the legislation might cover are thin on the ground. 

• Tobacco and Vapes Bill. The Bill will progressively increase the age at which people can buy cigarettes and stop vapes and other nicotine products from being deliberately branded and advertised to appeal to children.

• Digital Information and Smart Data Bill. The Bill will support the roll-out of smart data schemes beyond just the banking sector and support the establishment of secure and trusted digital identity products and services from certified providers to assist with, for example, buying age-restricted goods and services. The Bill will also strengthen the powers of the ICO.

Restrictions on advertising of junk food and high caffeine energy drinks to children put forward by the previous government also appear to have survived the change in government. More on all the above here.

CMA secures undertakings for Wowcher's use of dark patterns

The Competition and Markets Authority (CMA) has announced that it has secured undertakings from Wowcher to change its online selling practices. More on this here.

European Commission and CPC question Meta's ''Pay or Consent'' model

The Consumer Protection Co-operation Network (CPC network), overseen by the European Commission, has issued a formal letter to Meta concerning its "pay or consent" model.

Key concerns raised by the CPC include:

• The misleading representation of services as "free", while requiring user consent for personal data monetisation.

• Confusing user interfaces that obscure information on how personal and user-generated data are used for personalized advertising.

• Vague language usage, such as referring to personal data as "your info," or inaccurately implying complete ad removal for paying users.

• Pressuring established free account users into making immediate decisions by suspending accounts without adequate warning or time for consideration.

EU Commission publishes evaluation on consumer protection cooperation regulation

The European Commission has published its evaluation of the Consumer Protection Cooperation Regulation (CPC Regulation). The CPC Regulation creates a centralised framework that supports EU enforcement authorities jointly addressing breaches of consumer rules, particularly where infringements may be widespread. These enforcement authorities are collectively known as the CPC Network.

In summary, the Commission concluded that:

• Detecting and enforcing cross-border consumer law infringements has been generally successful.

• Traders reported appreciation of this centralised system. 

• Limitations have arisen from the lengthy nature of enforcement action and its inefficiency when tackling illegal practices. 

• Clarification is needed on how the CPC Regulation applies to non-EU traders targeting EU consumers.

The EU Commission may be given an enhanced role in ensuring the CPC Network are able to uphold the deterrent effect of the CPC Regulation. The Commission is currently assessing whether to maintain the current framework or to introduce new legislation.

CMA updates review of supermarkets’ loyalty pricing

The CMA has announced an update on their review into supermarkets' loyalty pricing. Announced on 30 January 2024, the CMA commenced its review to see if any aspects of loyalty pricing could mislead shoppers, impact consumer behaviour, or otherwise disadvantage shoppers. In particular the CMA considered if there are any pricing practices that indicate that non-loyalty prices are artificially inflated to make the loyalty price appear misleadingly attractive.

Through evidence collected so far, the CMA suggest there is little widespread evidence of shoppers being misled in this way. The CMA have commissioned a consumer survey to understand the impact of loyalty pricing on how consumers shop and wider attitudes to loyalty pricing.

The CMA's findings will be reported in November 2024, including the CMA’s guidance on how retailers can ensure compliance with consumer law when offering loyalty price promotions.

CMA publishes draft guidance on DMCCA enforcement powers

The CMA has announced that it is consulting on the new direct enforcement powers given to it under the Digital Markets, Competition and Consumers Act 2024 (DMCCA).

The new powers allow the CMA to bring direct action for breach of consumer protection legislation rather than going through the courts. They also enable the CMA to require that redress is offered direct to consumers and/or to impose fines of up to £300,000 or 10% of global turnover – whichever is higher. The powers are expected to come into force in 2025.

The consultation asks stakeholders if they agree with the CMA's proposed approach to conducting direct consumer enforcement investigations under the new powers. Read our article on this by CMA director, Jason Freeman, here.

EU Commission calls for evidence on minor safety under the DSA

The European Commission has launched a call for evidence on planned guidelines to help online platforms comply with their obligations to protect minors online, as required by the Digital Services Act (DSA). The call for evidence mentions that:

• The guidelines will apply to all online platforms which have underage users.

• The guiding principle is the child’s rights and the child’s best interest must be a central consideration. 

• Online platforms should adopt a risk-based approach by regularly conducting child specific impact assessments using the OECD’s “5C” typology of risks. 

• Identified risks should be addressed in a reasonable, proportionate, and effective manner, which may vary depending on the platform. 

• The guidelines will consider the Commission’s ongoing efforts to develop a harmonised age-verification solution based on the EU digital identity wallet.

The call for evidence remains open until 30 September 2024. The Commission will use stakeholders' input to draft the guidelines and conduct a separate consultation on the draft guidelines, which are planned to be adopted before summer 2025.

ASA publishes guidance on responsible influencer marketing

The ASA has released guidance on responsible influencer marketing to avoid influencers misleading their audience. The guidance states that whilst influencers can enter into commercial relationships with marketers/brands, consumers must not be misled. This means that the influencer must make clear to consumers where they mention a brand as a result of a commercial relationship.

The ASA requires the use of prominent labels upfront in posts to highlight when a post represents a marketing communication (distinguishing adverts from regular posts). The CAP Code specifically refers to “Advertisement Feature” as an appropriate label for ‘advertorial’ content and “Ad”, “Advert”, “Advertising”, “Ad Feature” and similar are all likely to be considered acceptable by the ASA (with or without a ‘#’, brackets or similar).

When targeting under-12s, advertisements must consider the following three points:

• the disclosure must be prominent – generally meaning large and colourful enough to stand out;

• the disclosure should also appear as the ad is first seen; and 

• the identity of the marketer should be clear upfront.

CMA secures undertakings from Simba Sleep over use of dark patterns

The CMA has issued a press release announcing that it has secured undertakings from Simba Sleep Limited (Simba) to change its online sales practices. More on this here.

ASA issues guidance on disclosing joint partnerships on Instagram

The ASA has issued guidance on joint partnership advertising on Instagram posts, whereby an influencer collaborates on an advertisement with the brand or corporate entity.

The guidance comes following a recent change on Instagram to allow joint posts and a recent ruling by the ASA on the use of such post by influencer Grace Beverly and active wear company TALA, which were not obviously identifiable as adverts.

The guidance states that:

• influencers and brands must ensure that adverts are clearly labelled, using prominent tags like ‘#ad’ to avoid misleading the audience;

• disclosure of commercial relationships in an influencer's bio is inadequate since bios may not be visible when content is algorithmically served; and

• adverts must be clearly identifiable as adverts – if it is not obvious an advert is being viewed, proper labelling is essential.

ASA issues guidance on substantiation in marketing

The ASA has issued guidance to advertisers on how to substantiate the claims they make when marketing products.

The ASA broke their guidance down into six steps: 

• Firms should hold evidence before making any claims so that it can be presented without delay if the ASA requests substantiation. 

• Evidence should support how claims will be interpreted by viewers, rather than what the firm may have intended it to suggest. 

• Bolder claims, such as absolute environmental claims, should be supported by higher levels of substantiation. 

• Any evidence provided should be directly relevant to the advertised product and its intended use. Evidence should also be directly applicable to the target audience for the product.  

• Methodology of clinical studies or testing that are used to market the product will be assessed by the ASA, so firms should ensure that it is robust. 

• The ASA will also check whether conclusions that marketers draw from trials or studies are exaggerated, or not supported by the data.

ASA issues guidance on swearing in advertisements

The ASA has issued guidance concerning the use of expletives in advertising. In short, it says that:

• Words used to allude to expletives should be sufficiently different from the expletive itself. For example, the ASA cites complaints against Tesco Mobile for using ‘shiitake’ and ‘pistachio’ that were upheld because these words were considered to reference expletives too overtly. On the other hand, the use of ‘fettuccine’ was allowed under certain circumstances.

• The audience to whom an advert is directed will play a part in determining whether it is considered inappropriate. Complaints against a beer advert outside a primary school containing the phrase ‘sober as a motherfu’ were upheld because the advert was found to allude too closely to an expletive, making it inappropriate to display in media that might be seen by children. 

• Partially obscuring words or replacing sections of them with asterisks is not always sufficient. Again, context and content will determine whether the advert is deemed inappropriate.

Worcester Bosch signs undertakings to change marketing practices

Worcester Bosch has signed undertakings after an investigation from the CMA found that its marketing claims were misleading potential customers. 

Worcester Bosch marketed its boilers as ‘hydrogen-blend ready’ and ‘future proof’ because they can run on a blend of up to 20% hydrogen. However, most boilers on the market and in customers’ homes already have this capacity.

Worcester Bosch’s suggestion that switching to one of their boilers would reduce the carbon footprint of the customer by allowing them to use hydrogen as an alternative fuel source was therefore misleading. In addition, the claim that customers’ boilers would be more ‘future proof’ failed to consider two facts:

• First, widespread introduction of hydrogen into the gas network is not a certainty. 

• Secondly, Worcester Bosch boilers cannot be modified to operate exclusively off hydrogen. This would mean that, if the gas network does move towards increased hydrogen consumption, clients would still need to update their boilers.

Worcester Bosch has signed undertakings to remove and/or amend any of this misleading marketing material and to ensure that its accredited installers and retailers do the same. The CMA will continue to monitor Worcester Bosch’s compliance with its undertakings.

ASA issues guidance on misleading gameplay in videogame ads

The ASA has issued guidance to advertisers on misleading advertising in relation to video games. The guidance can be summarised as follows:

• Do not misrepresent the game genre. Advertisers should ensure that the bulk of the gameplay experience shown in the ad does not differ significantly from actual game play. 

• Do not misrepresent graphics. Any mechanics and graphics depicted in the ads should carry over to the core game. 

• Do not misrepresent cinematics as actual gameplay. Advertisers must ensure that cinematics are not presented in a manner which could be misinterpreted as depictions of actual gameplay experience.

• Do not use small print to contradict. Small print can clarify but not contradict. On screen text saying ''not all images represent actual gameplay'' was held to be insufficient, as players were required to play through significant amounts of content different in style in order to access the limited amount of gameplay that was featured in the ad.

ASA issues guidance on advertising promotions

The ASA has issued guidance on advertising promotions. The guidance can be summarised as follows:

• Advertisements should include ''significant'' conditions. These include any terms and conditions, which are so important to a consumer's understanding that to exclude them from the ad would be materially misleading. 

• Don't over-promise and under-deliver. If you're offering a prize, it must be awarded as described, or a reasonable equivalent. 

• Be socially responsible. Promotions may be inappropriate for certain products or services, such as alcohol. 

• Hold evidence for any claims made. And ensure you can substantiate those claims.

ASA issues guidance on social responsibility

The ASA has issued guidance on social responsibility for advertisers. The guidance acknowledges that advertisers sometimes want to push boundaries and provoke debate, but they must still prepare their ads with a sense of responsibility to consumers and society.

Whilst the principle often comes into play when the ASA is considering complaints about body image, children and targeting, and ads that refer to drugs or tobacco. The guidance also explains that it can apply to more unexpected sectors, such as ads for charities, mobile phone networks, gambling, and alcohol and mentions that specific rules apply to gambling ads to ensure they are socially responsible.

The guidance also mentions environmental claims in ads as a hot topic for the ASA, and one around which advertisers must take extra to care to be socially responsible and avoid misleading the public about the environmental impact of their business or product.

Department for Business & Trade to consult on online ticket platforms

Business Minister Jonathan Reynolds issued a statement that the government will look to consult on consumer protection safeguards in relation to online ticket platforms. No confirmation of a timeline has been made but it is likely that the consultation will launch in October 2024 and be run by Department for Digital, Culture, Media & Sport and the Department for Business & Trade.

Which? raises concerns over misleading retail loyalty discounts

Which? Has published a report on its research into loyalty discount schemes run by major supermarkets and retailers. The report indicates concerns that discounts offered to loyalty scheme members may be misleading, as the non-member prices used to calculate these discounts are often not genuine.

A snapshot study by Which? looked at how many times the non-member prices on items with loyalty discounts had been in place during the previous six months. Which? found that at Superdrug, 16% of the products had been at their non-member price for less than half the time, at Boots, the figure was 10%, and at supermarkets it was 10% at Tesco, 5% at Sainsbury’s, and 3% at Co-op. The report gives other examples of potentially misleading discounts and calls for changes to relevant guidance.

The Chartered Trading Standards Institute (CTSI) has welcomed the report and is considering reviewing its Guidance for Traders on Pricing Practices to address these loyalty schemes.

Meanwhile, the Competition and Markets Authority (CMA) launched a review of supermarket loyalty pricing in January 2024. It recently issued an update on its review (see above). The CMA's final findings, including consumer law compliance guidance for loyalty price promotions, are due for release in November 2024.

ASA issues guidance on misleading consumers over product availability

The ASA has published guidance stating that advertisers should take action to avoid misleading and disappointing consumers, where product availability is low – even where this is unexpected. The guidance can be summarised as follows:

• Advertisers should make a reasonable estimate of likely demand and demonstrate how they arrived at this estimation. Forecasting from previous promotions on the same products, considering the scale of advertising, can be a useful place to start.

• Advertisers should consider withdrawing or reducing the frequency of ads where there is unexpected significant uplift in demand or sales for which the advertiser does not have sufficient product availability. 

• Advertisers should make clear any significant restrictions. For example, where a promotion limits the number of purchases per person. Keeping such limitations in the small print generally won't be enough.