Download Advertising, Promotion and Sales Introduction A somewhat ill

Advertising, Promotion and Sales
Introduction
A somewhat ill defined body of laws, codes of practice and guidelines govern the
advertising, promotion or sale of your products or services. If you promote your products
or services elsewhere within the EU, advertising laws are harmonised to a very limited
extent although local advertising agencies or international agencies will be able to advise
on local requirements.
Purpose of this Section:
The purpose of this section is to review those laws and codes to be considered in bringing
your products or services to the attention of potential customers.
Controls over Advertising on Broadcast Media
Apart from the laws relating to trade descriptions (see below) and industry-specific
controls, broadcast media is to a great extent self-regulated.
Control on broadcast media advertising is exercised principally by the Independent
Television Commission (ITC) and the Radio Authority (RA). The ITC and RA both issue
broadly similar codes of Advertising Standards and Practice.
The Broadcast Advertising Clearance Centre (BACC) must
advertisements at script and completion stage.
clear broadcast
The ITC and RA have powers to prevent the repeat of advertisements not withstanding
BACC clearance. The following restrictions apply to advertisements on broadcast media:

Misleading advertising
False descriptions and misleading price indications as to goods, services facilities and
accommodation are prohibited by trade descriptions law and the ITC and RA Codes.

Comparative Advertising
Under trade descriptions law and the ITC and RA Codes, comparisons must not be
misleading. Trade libel or trademark infringement (unlawful use of another's mark) are
other risks which may arise from inappropriate comparative advertising.
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
Environmental Claims
Misleading environmental claims may infringe trade descriptions law. The ITC Code
prohibits the encouragement of environmentally unfriendly behaviour and the RA Code
requires pre-clearance of such claims. In addition the Government is introducing a Code
of Practice on green claims including the use of eco-labels demonstrating use of high
environmental standards with respect to the goods and the energy label rating for white
goods for energy efficiency.

Industry-Specific Controls
ITC, RA and other Codes control advertising on broadcast media of alcohol, slimming
products, tobacco, cars, pharmaceuticals, charities and financial services and investments.
Breach of trade descriptions law is a criminal offence, for which the advertiser will be
liable to a fine unless appropriate care was taken.
Controls over Advertising in Non-Broadcast Media
Largely the Committee of Advertising Practice (CAP) under the British Code of
Advertising Practice (BCAP) exercises self-regulation. Complaints as to breaches of
BCAP from other advertisers are to the CAP, where as the Advertising Standards
Authority (ASA) hears complaints from the public. Specific controls over non-broadcast
media include the following:

Misleading Advertising
Misleading trade descriptions and price indications relating to goods, services, facilities
and accommodation are prohibited by trade descriptions and consumer protection law as
is suggesting that obvious features are special characteristics of your product. As to
pricing indications, if you comply with the DTIs Code of Practice for Traders on Pricing
Indications (CPTPI) you are most unlikely to fall foul of the law.

Comparative Advertising
Under trade descriptions law, comparisons must not be misleading. Additionally civil
actions against you for trade libel and trademark infringement are also potential risks if
you engage in inappropriate comparative advertising.

Product Testing
Misleading information as to product testing may infringe trade descriptions law and the
CAP requires the advertiser to obtain the approval of those who tested the products before
it is used in promotion.
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
Environmental Claims
There is no specific legislation applicable to environmental claims but false indications as
to methods of manufacture, composition or any physical characteristics may amount to an
offence under trade descriptions law. In addition, the Government is introducing a Code
of Practice on green claims including the use of eco-labels demonstrating use of high
environmental standards with respect to the goods and the energy label rating for white
goods for energy efficiency.

Industry-Specific Controls
Industry-specific legislation and Codes control advertising in non-broadcast media in
respect of alcoholic drinks (CAP), diet products, (legislation and CAP) consumer credit
(legislation and CAP), investment services (financial services legislation, CAP and
financial trade association rules) and medicines and treatments (medicines legislation,
CAP and rules of relevant trade associations).
Controls over Selling

Distance Selling including Mail Order
The various forms of mail order, direct marketing and distance selling are relatively
strictly regulated as to particulars required, targeting and data protection. Where you
request pre-payment, you must state your name and address. Quoted prices should be
held for an appropriate period and any price changes should be advised to the customer
before an order is accepted. Mail order addressed to children is not permissible. The
British Code of Advertising Practice (BCAP) lays down further more detailed guidance
for direct mail selling. If you are using a mailing list on a computer database, data
protection laws impose requirements as to collection, holding and use of data held on
identifiable individuals and BCAP provides further guidelines as to good list and data
base management practices.

Street Selling and Cold-Calling
Where your selling methods involve street selling or cold-calling (such as door-to-door
selling, telephone or fax canvassing), they are not illegal as such except for the possible
risk of a civil action against you for nuisance. There is a recorded case of a disgruntled
recipient starting a private prosecution for theft of fax paper! As to door-to-door selling,
significant cash commitments and credit agreements are subject to subsequent consumer
cancellation rights. If telephone canvassing is intimidating the caller may be open to
criminal prosecution.
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
Trading Schemes
Where selling takes place through pyramid selling, multi-level marketing, or similar
trading scheme, specific legislation governs; documentation, the recruitment of down
liners, amounts payable by customers/down liners; and the subsequent recoverability of
such payments. The DTI has passed legislation and published a code of practice on the
legal requirements and prohibitions on such trading schemes.

Distance Selling - Proposed changes
By June 2000, the UK is required to implement EC legislation on distance selling.
Planned requirements include; the provision of clear pre-contract information, which is
confirmed in writing by delivery; non-enforceability of contracts which are not in good
faith; right of withdrawal without reason within seven days from receipt but three months
where the proper information was not provided; reimbursement of payments upon
withdrawal. Additionally there are restrictions on the use of fax or automated calling
machines, including the requirement for prior consent.
Controls over Pricing

General Controls
Price advertising is primarily controlled by consumer protection laws which make it a
criminal offence for a trader to give misleading indications as to the price of goods,
services, accommodation or facilities. The Department of Trade and Industry introduced
a code (The Code of Practice for Traders on Price Indications (the PTPI)), compliance
with which (whilst not a defence) will be of great assistance in avoiding the risk of
prosecution.

Price Displays
Price displays should be accurate and state the total price for the product. Potential
offences could include: Undisclosed price differentials or hidden charges; failure in the
case of mail order separately to quote any additional post and packing; and failure to
quote VAT inclusive prices for consumers. In addition, price marking rules give detailed
guidelines which mostly relate to foods which require that unit prices for certain goods
sold in pre-packed form be stated and that goods in bulk be weighed out in front of the
customer.
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
Price Promotions
In the case of retail price promotions, the following rules are applicable: References by
manufacturers to recommended prices are permitted (although price fixing is not);
introductory offers are permitted as long as you intend subsequently to offer the product
at a higher price for at least 28 days during the succeeding three months; and price
reductions may be advertised if both prices are shown and either the higher price has been
offered in the same shop for at least 28 days during the previous six months or if the
circumstances of the previous price are explained.

Anti-Competitive Pricing
Pricing practices may also fall foul of EU and UK competition laws - particularly if you
are dominant in a particular market. Refusal to supply, discounts, discriminatory pricing,
predatory pricing and tying-in may all be evidence of abuse of that market dominance.
Controls over Consumer and Trade Promotions
The Code of Sales Promotion Practice (CSPP) published by the British Committee of
Advertising Practice largely governs sales promotion. The DTI Code of Practice also
covers Price promotions for Traders on Price Indications.

Vouchers and Coupons
With promotional schemes involving vouchers or coupons, the conditions of the
promotion must be clear and properly fulfilled. Coupons or vouchers must also bear cash
value - this is usually stated to be a small fraction of a penny as coupons with an
aggregate value of 25p or over must be, by law, redeemable for cash on request.

Free Offers
If you are involved in a free offer, promotion, no charge may be made except for postage
or freight costs. Special offers should not be allowed to run for so long that it becomes
misleading to call the scheme introductory. It should be stated if the offer date has been
extended. The terms of the offer should generally be clear and not misleading.

Extra-value
Where you are offering extra value promotions, including (for instance) flashed packs or
'get one extra free' promotions, the offer must be honest and accurate and there may not
have been any recent or simultaneous price rise. However, with certain products,
particularly foods, price marking rules set down detailed guidelines which require
businesses to quote unit prices on pre-packed goods.
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
Trade Incentives
With trade incentives, competition law rules must be borne in mind. In addition, bribery
laws, which apply where you are dealing with employees of public bodies effectively,
prevent incentives being offered to buyers or other staff within such organisations.
Controls over Prize Draws and Competitions

Legality of a Competition
In order for a competition to be legal, either entry must be free or success must depend to
a substantial degree on skill - even if the level of skill required is insubstantial.
If some skill is required, even to a minimal extent (e.g. spot the ball), an element of
guesswork will not prejudice the legality of the competition.
A competition will be considered to be free for these purposes even if most entrants
purchase products. The practicable availability of an alternative no purchase necessary
route will suffice. This approach is commonly used for non-skill-based scratch cards and
product promotions.

Guidance on Competition Rules
The Code of Sales Promotion Practice sets down guidelines as to fairness and clarity of
competitions and provides a useful checklist to consider on the information to be
provided to participants, both before product purchase and before entry.
These guidelines provide comprehensive guidance on certain key issues including:
keeping to stated competition closing dates (even where there has been a small response);
publication and notification of prize-winners; fair allocation of instant win tickets; wide
advertisement of the competition; making a clear distinction in the promotion between a
prize and a gift; and being realistic in the promotion as to the chances of winning.
The competition entry form and rules should give clear and full details. In addition, it
should specify the prizes and should also address such related matters as whether cash
alternatives and provision of incidental expenses,(e.g. spending money on a prize holiday)
will be provided.
Competitions are likely to constitute a legally binding contract with the entrants based on
the stated terms and hence must be complied with strictly.
If creative suggestions are involved, e.g. a most apt phrase in a tiebreak, judging must be
independent and impartial.
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If you wish to use such a phrase in a future promotion, your ownership of the future
copyright or other rights in the words, designs or other materials should be specified in
the conditions of entry.
Competitions and prize draws are something of a legal minefield and if you intend to run
such a promotional campaign, expert advice would be advisable from the outset
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