Download decision - New Zealand Advertising Standards Authority

09/219
DECISION
Meeting 12 May 2009
Complaint 09/219
Complainant: R. Evans
Advertisement: Holden New Zealand Limited
Complaint: The television advertisement (Key No: HN2321 30 3) pictured a range
of models of new Holden cars and contained the following offer:
“There’s a lot to like about no GST on any new Holden and you’ve got your Holden
dealer to thank for it.”
A large on-screen visual said: “NO GST”.
Complainant, R. Evans, said:
“Type: Television
Where: On our home television Tuesday 10/3109
TVNZ Channel 1
Who: Holden Motors
Product: Discount. They advertised that their customers would have no GST to pay
Complaint These companies are GST registered and they have to pay GST and they have to
render tax invoices including GST to their customers. What they are in fact doing is
giving a discount equal to the amount of the GST, the effect of which is to lower the
price and therefore lower (but not remove) the GST. The customers cannot avoid
paying GST. And customers who are GST registered (and the supplies are for their
business), may claim back the GST from the Inland Revenue through their GST
Returns. So what these suppliers are advertising is nonsense. They are misleading
their customers, and in fact what they are saying is dishonest.
Also Resene Paints recently had the same sort of advert - no GST - I do not know
exactly when this series of advertisements were televised.
The Holden advertisement has appeared again this evening - 23rd March at 9.05pm
on TV1.”
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The Chairman ruled that the following provision was relevant:
Code of Ethics - Rule 2 : Truthful Presentation - Advertisements should not
contain any statement or visual presentation or create an overall impression which
directly or by implication, omission, ambiguity or exaggerated claim is misleading or
deceptive, is likely to deceive or mislead the consumer, makes false and misleading
representation, abuses the trust of the consumer or exploits his/her lack of
experience or knowledge. (Obvious hyperbole, identifiable as such, is not
considered to be misleading).
The Advertiser, Holden New Zealand Limited, also on behalf of the Agency,
Ogilvy New Zealand, said:
“We refer to your letter and the enclosed correspondence received from R. Evans
concerning Holden New Zealand's recent "No GST" television advertisement.
In preparing this response to R. Evan's complaint we have consulted our advertising
agency Ogilvy New Zealand. This response is provided on behalf of both parties.
In his email, R. Evans alleges that Holden's advertising message that customers
would pay "No GST' on any new Holden vehicle purchased during the campaign was
misleading because Holden was simply discounting its vehicle prices by an amount
equivalent to the GST component and customers would still be paying GST on the
purchase.
Your letter highlighted as relevant Rule 2 of the Advertising Standards Authority
Code of Ethics, which provides generally that advertisements should not contain
misleading or deceptive statements. It also notes that "obvious hyperbole, identifiable
as such, is not misleading".
The recommended sale prices advertised in this television commercial were the
same as Holden's GST-exclusive recommended retail prices. Put another way,
Holden discounted its GST-inclusive recommended retail prices by an amount
calculated as 12.5% of the GST-exclusive prices. Although others using similar
campaign approaches have advertised actual discounts of 12.5%, Holden chose not
to refer to a percentage discount in its campaign and relied instead upon the headline
"No GST" combined with actual recommended sale prices to be paid by its
customers. This is because technically, the discount is approximately 11.1% of the
GST inclusive recommended retail price. In line with Holden's obligations as a GST
registered company it continued to account for GST paid on vehicles purchased at
the sale prices. The GST was calculated based on the amount paid by Holden's
customers for the vehicles purchased.
Holden takes seriously the need to ensure that its advertising does not mislead
consumers and where it makes representations in advertising intended as pure
hyperbole, it goes to lengths to ensure they are easily identifiable as such. This
campaign was designed around an obviously hyperbolic message. Holden considers
that members of the general public know that without exception, GST must be
accounted for in relation to all purchases of goods and services acquired from GST
registered companies. The "No GST" message was easily identifiable as mere
puffery or hyperbole. Holden does not consider that the ordinary consumer would
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have understood that the recommended sale prices would not include GST. Instead,
they would have taken from the advertisement the fact (which was accurate) that the
prices on offer had been discounted to the level of GST-exclusive recommended
retail prices.
Finally, Holden notes that the Advertising Standards Authority has considered this
exact issue on a number of occasions in relation to analogous "GST free" campaigns
run by Resene and Mitre 10. In decision 09/017 (a copy of which was enclosed with
the complaint provided to Holden) the Chairman reaffirmed previous decisions finding
that GST free claims were not in breach of the Advertising Code of Ethics, being
"merely puffery or hyperbole making an inviting offer to customers and this was
permitted by the Advertising Codes." Holden considers the same decision is
appropriate in this case.
We hope that our response clarifies this issue and that the Advertising Standards
Authority agrees that the advertisement is not misleading or deceptive and does not
constitute a breach of the Advertising Code of Ethics. However, should you require
any additional information please contact us.”
Commercial Approvals Bureau (CAB) said on behalf of the media:
“We have been asked to respond to this complaint under the Code of Ethics, Rule 2 truthful presentation.
The complainant feels commercials which advertise products for sale where no GST
is to be paid on the purchase price are misleading and in fact dishonest.
In an advertising format now used by several advertisers a no GST discount is being
offered on a variety of Holden vehicles. In reality, the GST is still being paid. The
goods are just being discounted by 12.5% which is the equivalent of GST. It is merely
an alternative marketing ploy using puffery to catch the consumers' attention.
This issue has been raised several times in the past and in each case the complaint
has not been upheld or accepted. (Previous rulings 01/329, 07/004 and 09/017
confirmed ruling 04/444 where the Chairman said that in advertising vernacular "NO
GST" was merely puffery or hyperbole making an inviting offer to consumers, and
this was permitted by the Advertising Codes).
CAB believes the rulings as applied in previous complaints should stand and
submits this complaint is not upheld.”
Deliberation
The Complaints Board read the correspondence relevant to the complaint and
viewed the television advertisement. It noted Complainant, R. Evans, was of the
view that the advertisement contained a misleading offer where it said “No GST”.
The Complainant said: “These companies are GST registered and they have to pay
GST and they have to render tax invoices including GST to their customers. What
they are in fact doing is giving a discount equal to the amount of the GST…”
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The Chairman directed the Complaints Board to consider the complaint with regard
to Rule 2 of the Code of Ethics. In this respect it was required to determine whether
the advertisement contained any statement or exaggerated claim which was likely to
mislead the consumer, or exploit his/her lack of knowledge. The Complaints Board
noted that Rule 2 also contained the following provision: “(Obvious hyperbole,
identifiable as such, is not considered to be misleading).”
The Complaints Board noted the response received from Holden New Zealand
Limited where it said
“Although others using similar campaign approaches have advertised actual
discounts of 12.5%, Holden chose not to refer to a percentage discount in its
campaign and relied instead upon the headline "No GST" combined with
actual recommended sale prices to be paid by its customers. This is because
technically, the discount is approximately 11.1% of the GST inclusive
recommended retail price. In line with Holden's obligations as a GST
registered company it continued to account for GST paid on vehicles
purchased at the sale prices. The GST was calculated based on the amount
paid by Holden's customers for the vehicles purchased.”
Accordingly, the Complaints Board noted that the company did in fact pay GST and
the offer “No GST” referred to and was reflected in the discounted prices advertised
for the cars shown.
The Complaints Board noted that the Advertiser had designed the campaign around
a hyperbolic message, which was a ploy to seek consumer’s attention. It then
referred to Chairman’s Ruling 09/017, which confirmed previous rulings regarding
similar “No GST” offers, where the Ruling had said:
“The Chairman said that in advertising vernacular “NO GST” was merely
puffery or hyperbole making an inviting offer to consumers, and this was
permitted by the Advertising Codes. Accordingly, the advertisement was not
misleading and did not effect a breach of Rule 2 of the Code of Ethics….”
The majority of the Complaints Board said that this ruling applied to the
advertisement before it which used a long standing and obviously hyperbolic
convention, recognisable as such by the consumer. Therefore, in the majority view,
the advertisement was not misleading and was not in breach of Rule 2.
However, a minority disagreed. In the minority view the “No GST” offer was
technically inaccurate and did not reflect the true financial situation in the offer. The
minority was of the view, that there were more accurate ways of advertising cars
with discounted prices. Accordingly, the minority said the advertisement was
misleading.
In accordance with the majority view, the Complaints Board ruled to not uphold the
complaint.
Decision: Complaint Not Upheld