The Advertising Standards Authority (ASA) has recently taken action against several major UK telecoms providers for not clearly communicating mid-contract price increases in their advertisements, leading to consumer confusion and potential financial detriment. This move by the ASA highlights the importance of transparency in marketing communications, particularly in the telecoms sector where consumers often commit to long-term contracts. In this update we summarise the key takeaways from the ASA's rulings.

The ASA and CAP Code

The ASA is the UK’s independent regulator of advertising across all media, ensuring that ads conform with advertising rules designed to protect consumers and maintain fair competition. It enforces the Advertising Codes, including the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (the CAP Code).

The relevant rule for the rulings is Rule 3: Misleading Advertising of the CAP Code. This imposes obligations to prevent advertisements from misleading consumers through false information, omissions, or ambiguous presentations.

The ASA's Rulings

The ASA’s investigation revealed that the telecoms providers in question had failed to adequately disclose mid-contract price increases, leading to consumer confusion and potential financial detriment. The ASA banned the non-compliant ads from appearing again.

The instances of non-compliance by the telecoms providers held in the rulings were as follows:

  • BT: Advertised fixed monthly prices without clearly indicating that prices could increase mid-contract. This omission misled consumers into believing that their prices would remain constant throughout the contract period.
  • EE: Used small print to disclose price increases, which contradicted the main price claims. This practice made it difficult for consumers to understand the true cost of their contracts.
  • O2: Did not make the terms of price increases sufficiently prominent. Important information about potential price hikes was buried in the fine print, leading to consumer misunderstanding.
  • Virgin Media: Misled consumers by implying fixed prices that were subject to change. The lack of clear communication about price variability resulted in consumer confusion.
  • PlusNet: Failed to clearly communicate the conditions under which prices could rise. This lack of transparency left consumers unaware of potential future costs.
  • TalkTalk: Omitted crucial information about potential price hikes in their ads. This omission prevented consumers from making fully informed decisions about their contracts.

Importance of Adhering to the CAP Codes

The CAP Codes sit alongside OFCOM rules on telecoms contracts, such as the new OFCOM rules prohibiting inflation-linked price rises.

Adhering to CAP codes is crucial in order to maintain consumer trust and avoid regulatory sanctions.

Telecoms providers should ensure that all pricing and other material information is clear and prominent in their advertisements. This includes conducting thorough assessments of adverts before they are made public to ensure compliance with the advertising standards.

The Broader Perspective

This crackdown by the ASA ties into broader regulatory trends, such as the implementation of stricter regulations on subscription services, and requirements for businesses to provide clear communication about terms and conditions, including price changes to consumers under the Digital Markets, Competition and Consumers Act 2024 (DMCCA). You can access our most recent blog on the DMCCA here.

Additionally, there has been growing criticism of “dark patterns”—design choices that manipulate consumer behaviour. These patterns often obscure important information or make it difficult for consumers to make informed decisions.

The recent Sky/Now TV decision is a pertinent example, where the ASA found that the company had not clearly communicated the terms of free trials and additional costs. This case underscores the ongoing need for transparency in advertising and the importance of clear communication about pricing and contract terms.

By ensuring compliance with advertising standards and staying abreast of regulatory changes, telecoms providers can avoid regulatory action and build stronger, more transparent relationships with their customers. This approach not only helps in maintaining consumer trust but also enhances the overall integrity of the advertising industry.

In conclusion, the ASA’s recent actions against major telecoms providers serve as a stark reminder of the importance of transparency in advertising. By adhering to the CAP codes and conducting thorough assessments of adverts, companies can ensure that they provide clear and accurate information to consumers, thereby fostering trust and avoiding regulatory sanctions. As the regulatory landscape continues to evolve, staying informed and compliant will be key to maintaining consumer confidence and upholding the standards of the advertising industry.

We have extensive experience advising clients on the advertising requirements. Should you wish to discuss anything raised in this blog further, please contact Martin Sloan, Grant Strachan or your usual Brodies contact.

Contributors

Martin Sloan

Partner

Amelia Wilson

Senior Solicitor

Steven Pears

Trainee