Don’t Raise Prices For Black Friday
The Consumer Ombudsman cited three retailers for raising prices before offering deep discounts. Examples included:
• a duvet previously marked at 1,500kr was raised to 2,000kr, then marked at a 50% discount for a sale price of 1,000kr
• a door previously marked at 899kr was raised to 1,079kr, then marked at a 20% discount for a sale price of 863kr
The Consumer Ombudsman ruled the offers were misleading, since the merchandise had never been sold at the highest prices, and true discounts were much less than those based on the (inflated) ‘normal’ prices.
jbho: a reminder that discount rates must be based on an actual price, supported by evidence of the price basis (how a company actually listed prices: MSRP, etc.), and that basis must be disclosed to consumers.
KR60,000 For Misleading Trial Membership
Dating site single.dk (operated by Babel) allegedly ran a promotion offering users a 7-day “non-binding” gold membership trial for kr19. The “non-binding” nature of the offer was explicitly stated in the ad and on the sign-up landing page (no obligations, cancel at any time). However, a requirement to cancel within 7 days was not clearly and conspicuously disclosed. Babel also failed to disclose the fact users would be charged kr45 per week for 10 weeks after the initial seven-day period elapsed. In addition to a fine of kr50,000 (~$7,000), the Consumer Ombudsman seized kr10,000(~$1,400) to refund impacted consumers.
jbho: the terms of any trial offer must be clearly and conspicuously disclosed, and make sure to get appropriate (express informed) consent before charging consumer credit cards.
Although this crosses jurisdictions, I think the FTC requirements imposed on NutraClick for similar alleged violations may be helpful. In that case, the FTC required NutraClick to clearly and conspicuously communicate the name of the seller or provider of the good or service, provide a description of the goods or services being sold, and provide a (simple) mechanism to stop any recurring charges. In addition, NutraClick disclosures must specify:
* Consumer will be charged
* Charges will increase after a trial period ends
* Charges will be on a recurring basis unless the consumer takes steps to stop
* The amount (or range of costs) the consumer will be charged
* Frequency of the charges
* Deadline (by date or frequency) by which the consumer must act in order to stop all recurring charges
In this case, the FTC required a tickbox (or similar method) to obtain consent, with the above disclosures in close proximity to the tickbox.
KR 66,000 For Misleading Limited Time Offer
Online retailer Dealhunter allegedly ran a ‘limited time’ promotion on strawberries with advertising encouraging consumers to ‘buy now.’ However, when the initial period expired, the promotion was extended for several days. Since the limited offer was not really limited, the consumer ombudsman ruled the promotion was misleading, and issued a fine of kr 50,000 (~$8,000), and confiscated an additional kr 16,693.98 (~$2,600) to cover the profits gained through the misleading campaign.
jbho: the fines may seem relatively modest, but disgorgement of profits is a reason to pay attention to the Consumer Ombudsman’s enforcement activities.
KR 1 Million For Deceptive Marketing Of Fixed Term Loans
Mortgage lender Totalkredit allegedly marketed fixed-rate mortgages, but failed to disclose that despite the fixed interest rate, the actual installment payment amount could change. After some 200 complaints to the Consumer Ombudsman, it was determined Totalkredit repeatedly raised installment payment amounts on its ‘fixed-rate’ mortgages. Since consumer opting for a fixed-rate paid more, under the assumption the total amount of the loan was known in advance, Toatlkredit was in violation of section 3 of the Marketing Act (distorting consumer economic behavior in the market through error or omission), and a penalty of kr 1,000,000 (~$160,000) was assessed.
jbho: looks like a bit more than a failure to disclose qualifying terms. Appears Totalkredit was playing fast and loose with the meaning of “fixed.” Another reason to think carefully about using absolutes in advertising.
KR 250,000 For Hidden Costs
Cable provider Canal Digital allegedly failed to clearly and conspicuously disclose bi-annual service charges in its TV and YouTube advertising. Packages advertised monthly rates of 99kr or 149kr per month, but a 389kr fee to be assessed every 6 months was either disclosed in small fonts in unremarkable areas of the screen or was omitted entirely (e.g., no simultaneous notice). Thus, the ads were misleading and a penalty of kr 250,000 (~$40,000) was assessed.
jbho: a reminder to follow the 4Ps in all advertising mediums.
KR200,000 For Unsolicited Postal & Telemarketing
Aon Insurance brokers allegedly contacted some 4,000 people via post, and some 1,000 via telephone with unsolicited advertisements. All were registered on the respective Robinson’s List (Do Not Mail, Do Not Call), and were contacted due to Aon’s vendor’s failure to scrub contact lists. As Aon was responsible for its vendor’s activities, a fine of kr200,000 (~$3,000) was issued.
jbho: a reminder to keep tabs on your vendors, and make sure opt-outs and scrubbing lists are up to date.
KR140,000 For Limited Discount Offer
Profil Optik allegedly posted flyers that advertised in large type: “50% off most frames.” However, a significantly smaller typeface that ran vertically along the edge stated: “Valid on purchase of complete glasses and cannot be combined with other offers and discounts.” Consumers complained the limitations were only made known after selecting frames and attempting to make a purchase. The Ombudsman found that consumers were unlikely to notice the restriction, and thus unlikely to get the promised discount. Therefore, a fine of kr140,000 (~ $19,000) was assessed.
jbho: a reminder any limitations on an offer must be clearly and conspicuously disclosed near the triggering claim, and presented in a way that consumers are likely to notice, read, and understand
Here it appears that although Profil Optik avoided absolutes, the limitations may have invalidated the “most” claim. So remember also that disclaimers can’t contradict the claim.
KR119,000 For Misleading Interest Rates
Quick loan provider Ferratum allegedly mislead consumers about APRs by basing its interest rates on a 360 day year instead of a 365 day year. As a result, the cost of borrowing advertised to consumers was less than the actual amount. Additionally, interest was only presented as an amount, and not as a percentage as required by the Marketing Act. Ferratum has since corrected the interest rate claims, but not in time to avoid a kr119,000 (~$17,000) fine.
jbho: reminder that Reg Z type requirements apply globally.
KR300,000 For Misleading Interest Rates
Payday loan provider Vivus allegedly advertised misleading interest by basing them on 30 days instead of 365 days. As a result, interest rates were listed as 19% when that actual APR was 730.1%. Thus the ads violated the Marketing Act and Vivus was assessed a fine of kr300,000 (~$43,000).
jbho: reminder that Reg Z type requirements apply globally.
KR20,000 For Telemarketing Cold Calls
Telco TDC allegedly made unsolicited telemarketing calls to numbers it a purchased from list broker We Love Leads. The numbers were allegedly obtained through online sweepstakes/contests by We Love Leads, who argued the online forums were how it obtained consent for third-party TDC to make the calls. The court determined We Love Leads never obtained a valid consent (something TDC should have verified) and fined each party kr10,000 (~$1,500).
jbho: a reminder that many international jurisdictions do not permit bundling of consent. And that third-party marketing requires a qualified opt-in consent (i.e., say who will be doing the marketing).
Also, another reminder that if you are going to source data from third parties, make sure to perform due diligence to ensure the data is collected in a fair and lawful manner. Additionally, get representations and warranties that you have consent to use that data for the desired purposes, and make sure you have well-constructed contractual agreements to make sure vendor obligations are clearly defined, and liability is appropriately distributed.
KR15,000 In Personal Liability For ‘Surreptitious’ Advertising
Media Xpress allegedly designed ads for a lighting company that presented the ads as editorial content. In addition to fining the company kr30,000 (~$4,400), the editor-in-chief was personally fined kr15,000 (~$2,200) for his role in the alleged violation. Media Xpress has informed the Consumer Ombudsman they have implemented measures to avoid similar violations in the future.
jbho: Native advertising is a hot topic, and regulators are stepping up enforcement all over the world. A reminder to clearly and conspicuously identify any sponsored content.
KR250,000 For 27,000 Spam Texts
Taxa 4×35 allegedly used numbers obtained from a former partner to send text messages ‘informing’ some 27,283 consumers about its own Taxi service and app. The texts read (loosely translated):
“Serviceinfo: ClickATaxa has terminated its relationship with TAXA 4×35. This means that TAXA 4×35 will no longer operate rides you book with the ClickATaxa App. if you would like to continue using Copenhagen’s largest taxi company, download the TAXA 4×35 App [Link].”
Taxa 4×35 argued the messages were operational, but the court ruled the purpose was to solicit business, and consent was required to send the texts. Given Taxa 4×35 failed to get consent, and failed to provide an opt-out or opt-out information, the kr250,000 (~$35,700) fine was warranted.
jbho: don’t try to overload an operational message with marketing. And a reminder that the purposes of a message turns on the perception of the recipient (or the courts), and not your intent.
Ford Cited For Native Advertising
Eleven Ford ‘enthusiasts’ posted images of Ford vehicles on their Instagram feeds, but allegedly failed to disclose the posts were motivated by their relationships with Ford. The posts included no disclosures (did not use words such as ‘advertising,’ or ‘ad’), and simple hashtags (#ford-danmark, #ford, @forddanmark) were insufficient to clarify the posts were really advertising. Therefore, the posts violated the Marketing Practices Act and the Ombudsman has referred to the matter to the enforcement division.
jbho: if you are going to present sponsored content, you must make clear at every stage (linking to, on the page, and in the content) that the content is advertising.
And as a reminder, according to the FTC, Native Advertising is an advertisement that is dressed up to look like, or mimic, editorial content. The ads can appear in a wide variety of forms, including written narratives, videos, infographics, images, animations, in-game modules, and playlists on streaming services. This formatting can blur the distinction between advertising and non-commercial content, meaning the design, style, and behavior of the digital media is presented so that an ad can be indistinguishable from its surroundings.
Per enforcement I’ve seen, disclosure language in the ‘Don’t’ column includes: “Brand Publisher”, “Brand Sponsor”, “Promoted, “Promoted Stories,” “Presented by [X],” “Brought to You by [X],” “Promoted by [X],” and “Sponsored by [X].”
Drug Store Cited For Misstated Discounted Rates
Matas ran promotions on clearance items, with decreasing sales prices staggered over time (25% off, then 40% off, etc.). Matas advertised the discounted prices as percent off the initial price, and not as a percent off the last advertised price. The Ombudsman ruled that an initial cost was irrelevant when a price had been reduced several times. Since items had already been marketed as 25% off, the subsequent ‘Save 40%’ claim was misleading, as consumers would believe savings were more than they were. The ads therefore must be pulled. Matas has agreed to adjust its future marketing accordingly.
jbho: discount rates must be based on an actual price, supported by evidence of the price basis (how a company actually listed prices: MSRP, etc.), and we must disclose the basis for the pricing to consumers.
The math here is a little complicated, so here’s an example. Say a $100 product was offered for 25% off, making the sale price $75. If the product is then offered at 40% off of the initial base price of $100, then the new sale price is $60 – a savings of $15. However, if the 40% were taken off of the new base price of $75, the new sale price would be $45 – a savings of $30. Not an insignificant difference.