May 2, 2014

The Long Arm of the Law: Points of Caution for Foreign Businesses Advertising to UK Customers

Seller Beware: Consumer Protection Insights for Industry

Foreign businesses need to tread carefully when planning online advertising campaigns which target or have reach to the UK market.

The main enforcer of advertising in the UK is the Advertising Standards Authority (ASA). The ASA is an independent regulator, set up by the advertising industry body Committee of Advertising Practice (CAP) to enforce CAP's self-regulatory codes for broadcast advertising (BCAP Code) and non-broadcast advertising (CAP Code). The self-regulatory regime sits alongside the legislative framework controlling unfair commercial practices, including the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs) (which implement European Union law on unfair commercial practices, and misleading and comparative advertising respectively), as well as industry-specific legislation governing advertising of alcohol, diet products, food products, financial services, tobacco products, pharmaceuticals, and health and environmental products and services.

The ASA regulates most forms of advertising, from magazine and newspaper adverts to posters, television, radio and direct mail advertising. The ASA also has power to investigate complaints relating to online advertising, including banner adverts, paid-for (sponsored) searches and, since 2010, marketing on companies' own websites and on non paid-for space under their control, such as social networking sites like Facebook and Twitter.

Given the ASA's reach extends to online advertising in traditional paid-for spaces such as Google, but also claims and adverts made on a company's own website or their social media pages, what are the risks for foreign businesses?

If a foreign business is launching a UK-based advertising campaign, then it should carefully comply with the Codes and the legislative framework (more detail below). The ASA has limited scope to deal with complaints about adverts that originate outside the UK, although, depending on the country of origin, the ASA will often refer a complaint to the relevant advertising regulator in that country for their investigation. Twenty-four European countries are members of the European Advertising Standards Alliance (EASA), an alliance which promotes reciprocity among national advertising regulators and has a cross-border complaints system.

The United States is not a member of the EASA; nor does it have a reciprocal arrangement with the UK for referring cross-border advertising complaints. The ASA has said, however, that it will take steps to act on complaints about adverts which do not originate from the UK, but are directed at UK consumers. The ASA's guidance says that "directing" an advert at UK consumers may include showing any applicable prices in GBP(£), including UK contact details (for example, for customer service or website enquires) or using a irrespective of where the organisation is established.

So what do foreign businesses need to do to comply with the UK Codes? Under the CAP and BCAP Code, all advertising in the UK (or targeting the UK market) must be legal, decent, honest and truthful, respect fair competition and be prepared with a sense of responsibility to consumers and to society. In addition, advertising must not mislead (or be likely to do so) directly or by omission or by presenting information in an unclear, unintelligible or ambiguous manner or by exaggeration, and advertisers must be capable of objectively substantiating their claims (express of implied) by documentary evidence if they are challenged. Mere "puffery" is allowed, but only where the claim is obviously exaggerated or subjective (for example, a claim that a product is "out of this world" would not be construed literally). The ASA is extremely active in monitoring and adjudicating advertising and we have seen numerous occasions where business' creative advertising, bold claims or attempts at puffery have been found to breach the Codes. For example, the ASA has consistently found that claims such as "best", "most advanced", "better", "best value" have fallen foul of the Codes; although these claims may be considered as puffery in other jurisdictions, the ASA would require the marketer to show that it is indeed the "best" or "most advanced" in the class, by way of documentary evidence. A solution in these cases could be to highlight the superior elements of the product or service advertised, such as it being "lightest in class" or "smallest on the market" if evidence bears that out. Care should also be taken to avoid advertising that, for example, glorifies alcohol consumption, excessive speed while driving (see here) or makes inappropriate "organic" claims.

The ASA's powers to sanction infringers are fairly limited; they have no power to impose fines, but they can order non-compliant advertisers to take down all infringing adverts. Rulings are published weekly in full detail on the ASA's public website (the so-called "name and shame" system). The ASA is also able to refer serious or persistent breaches of the Codes to local weights and measures authorities (local authority regulators that have powers to investigate traders acting outside the law) and to the Competition and Markets Authority, which have greater powers to enforce consumer protection legislation under Part 8 of the Enterprise Act 2002.

Foreign businesses targeting the UK market should therefore take care to review their advertising and marketing practices prior to publication. Crucially, advertising which is seen as mere puffery abroad may not be in the UK. Businesses must therefore ensure that they hold documentary evidence to prove all claims (express or implied) which are capable of objective substantiation, and take care to comply with the Codes, not only in respect of traditional advertising on television, billboards and in magazines, but also online and on their own websites if directed at the UK market.

© Arnold & Porter Kaye Scholer LLP 2014 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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