The Utility Warehouse has been accused of misleading customers with an advert, the Advertising Standards Authority has ruled.
The watchdog barked at the company after a member of the public challenged whether a lowest price claim in an advert was misleading and could be substantiated.
The advert in disrepute was a circular, for a utilities service, which included a letter and a leaflet.
Both parts included claims that consumers could benefit from “The UK’s cheapest Home Phone The UK’s cheapest Home Phone and Broadband bundle The UK’s cheapest Mobile tariffs The UK’s cheapest standard Gas and Electricity”.
Further text in the letter stated “NB. There are terms and conditions to the Utility Warehouse Price Promise. I’m happy to explain it all to you or see the Utility Warehouse website for full details”.
Small print on the leaflet stated “Charges, terms and conditions apply. For full details of the Utility Warehouse Price Promise see www.utilitywarehouse.co.uk”.
When questioned by the ASA the Utility Warehouse said it was aware there was potential for confusion with marketing of this type and the ad therefore invited consumers to contact a distributor for further information or to visit their website, where full details of the price promise were published.
It said the principle of the price promise was that they guaranteed consumers would pay less, on a like-for-like basis, than with their current provider if they switched to them. If they did not pay less, the Utility Warehouse promised to pay double the difference. It continued to cover its back claiming that the like-for-like comparison was carried out in a clear and fair way for each of the services they provided.
It added its conditional “UK’s cheapest” offer was based on the price promise and because it guaranteed to pay double the difference in the unlikely event anyone did not save money with the company, it was “by definition cheaper once that refund had been provided.”
It continued to plead innocence claiming its tariffs had been constructed taking into account detailed knowledge of the market to ensure it was “as confident as it could be that consumers who switched to them would achieve real savings.” and comparisons made were based on customer usage of equivalent services provided by other suppliers.
However, the ASA didn’t buy the spiel. It noted the “UK’s cheapest” claims were intended to relate to the price promise, under which it was guaranteed that consumers would save money or receive double the difference back. However, it pointed out that the claims were likely to be interpreted as being lowest price claims, rather than as relating only to a price promise.
It said if marketeers claimed to always offer the lowest prices, or if prices changed so frequently the claim was likely to be inaccurate by the time it appeared, they should use a price monitoring and adjustment policy to ensure the claims could be supported.
As a result it said a price promise did not justify a lowest price claim in the absence of an adequate monitoring and adjustment policy and noted advertisers should be in a position to substantiate lowest price claims.
The watchdog ruled that the ad must not appear again in its current form as well as ordering the Utility Warehouse not to make lowest price claims in future, unless it was in a position to substantiate them.