AJPark

Advertising is at the heart of every retail business. It is a vital ingredient to success. Advertising tells consumers about the goods and services you sell in the marketplace.  

It is important that advertising standards are set and met to ensure advertising complies with the law, is truthful and not misleading or deceptive and is socially responsible.  Besides the advertising codes, retailers also need to be aware of rules for comparative advertising and the provisions of the Fair Trading Act.
 
The Advertising Standards Authority (Inc)
The Advertising Standards Authority (Inc) (the ASA) is responsible for overseeing advertising in New Zealand and setting and monitoring advertising codes.

Membership of the ASA comprises of representatives from:

• Association of New Zealand Advertisers (Inc)
• Communications Agencies Association of New Zealand
• Community Newspapers
• Interactive Advertising Bureau of New Zealand
• Letterbox Media Association
• Magazine Publishers’ Association (Inc)
• Newspaper Publishers’ Association of New Zealand (Inc)
• New Zealand Cinema Advertising Council
• New Zealand Marketing Association (Inc)
• New Zealand Post
• New Zealand Television Broadcasters Council
• Outdoor Advertising
• Pay TV Group
• Radio Broadcasters Association (Inc)

What does the ASA do?
The ASA introduces and amends codes of practice developed for specific categories of advertising.  They do this in consultation with industry, consumer groups and government departments.

The main objectives of ASA are:

• To seek to maintain in all media a proper and generally acceptable standard of advertising and to ensure that advertising is not misleading or deceptive, either by statement or by implication.
• To establish and promote an effective system of voluntary self-regulation about advertising standards.
• To establish and fund an Advertising Standards Complaints Board (ASCB).

What are the ASA codes?
There are 14 codes. They are available at the Advertising Standards Authority website.  Twelve of the codes are about advertising to children, comparative advertising, environmental claims, farm safety, financial advertising, food advertising, gaming and gambling, liquor, road safety, therapeutic advertising, tobacco products and weight management. In addition, there are two overarching codes.  These are the ethics code and the people in advertising code.

For retailers, advertising usually takes place in newspapers and magazines, catalogues, on the radio or on television.  You may even advertise online.  The codes apply to all advertising including in-store advertising.

Every advertisement needs to comply with the rules set out in the Advertising Standards Codes. 

Everyone who advertises should be familiar with the codes.  It would be prudent to run all advertising before your lawyer before it is published to ensure that there are no problems.

Who administers the codes?
In March 1988 a separate self-regulatory body called the Advertising Standards Complaints Board (ASCB) was set up to govern the codes. The role of the Board is to rule on complaints received about advertisements, advise the ASA on interpretation of the codes and possible improvements, and report to the ASA on any aspect of advertising that causes concern.

The rising number of complaints
The ASCB has considered 503 advertisements already this year.  59 complaints were considered in October and November 2007 alone. 

It is easy to complain and costs nothing to do so.  It’s as easy as filling in a form.  Once a complaint has been laid, the ASCB will seek comments from all interested parties and then adjudicate on the complaint.  If the complaint is upheld, then the advertiser, advertising agency and media are requested to withdraw the advertisement voluntarily. 

No business is immune from a complaint.  Retailers are no exception.  A number of decisions relate to retailer advertising.

What are the complaints about?
Everything and anything.

Some people like nothing more than to complain; they have no sense of humour, a thin skin and much spare time. 

Previous decisions of the ASCB can be insightful and are a useful reference tool for those in the advertising industry or for those who do their own advertising.

A recent complaint related to the use of the word “free” in a billboard advertisement.  The advertisement by Smith & Smith – Carglass (NZ) Ltd read:

BrØken glass? Call 0800 80 90 80
CAR – HOME – BUSINESS – 24/7
Smith & Smith GLASS WITH CARE

An orange tag emulating a sticking plaster was obvious on the left hand side of the advertisement. On it was the wording:

WE DO FREE* WINDSCREEN CHIP & CRACK REPAIRS
* Conditions Apply

The complainant said: “The billboard advertises ’WE DO FREE WINDSCREEN CHIP & CRACK REPAIRS. Conditions Apply’ but it’s not free.   I've rung them and they will put it through on your insurance so it is paid for at some point!”

The issue before the Complaints Board was to determine whether the advertisement contained any statement which directly or by implication, or exaggerated claim was misleading or was likely to mislead the consumer, or exploit their lack of knowledge.  If it did then it would fall foul of Rule 2.

Rule 2 reads:

“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”

The Complaints Board noted the “free” offer in the advertisement was qualified by an asterisk which referred to the statement “* Conditions Apply”.

In its view, the “*Conditions Apply” statement was not large enough for a passing motorist to read.

The Complaints Board then referred to its long-held requirement “that where an asterisk was used to lessen the value of an offer, it must be made clear in the advertisement exactly how the offer is reduced. …

the advertiser should draw the attention of the viewer or reader to the conditions or qualifications in an obvious way.”  [Decision 94/40]

As this was not the case in the advertisement and the “free” offer only applied to those who had already bought insurance policies with a “free” windscreen repair choice, the Complaints Board said the repair was not in fact “free”.  Further, that condition had not been drawn to the attention of the consumer in an obvious way. The Complaints Board upheld the complaint.

This decision highlights that you need to think about everyone who will see the advertisement not just those the advertisement is aimed at.

What happens if you breach a code?
If one of your advertisements breaches the codes, the ASA members (who include media organizations such as newspapers and television) cannot run it.  So while breaching the codes won’t necessarily expose you to court action or fines, it may mean you have to write-off the cost of an advertisement.

The ASA decisions are published on the ASA website and are often published in newspapers, which could expose you to adverse publicity.  Defending your advertisement before the ASA also involves legal expenses. 

Comparative advertising
There are other issues to consider when advertising as well. The first is how trade mark law impacts on comparative advertising

Before August 2003, comparative advertising could infringe a brand if that brand was registered as a trade mark in New Zealand. In August 2003 our law changed. 

You can now advertise your goods comparatively alongside competitors’ goods.  But you need to take care that your use of a competitors trade mark is “in accordance with honest practices in industrial or commercial matters” Comparisons must not “without due cause, take unfair advantage of, or [be] detrimental to, the distinctive character or the repute of the trade mark being used”.

Comparisons of your goods with another’s should be made cautiously and with care.

Fair Trading Act
Under the Fair Trading Act, you must not engage in conduct that is misleading or deceptive. You must also not make false or misleading representations about goods or services. This includes omissions, so any information left out, which would create a false representation, is prohibited.

Also, you must not mislead consumers about the quality, origin, quantity, type or condition of goods or services. This also extends to qualifications or skills and endorsements or sponsorships. Any statements about qualifications, skills, endorsements or sponsorships must be true.

New Zealand has several laws governing a trader’s duties about the quality and standard of goods and services as well as various laws on product labelling and safety. You can be liable under these laws and the Fair Trading Act for breaches.

Remember your duties
Every time you are planning on advertising your goods or services you need to have top of mind your duties.  Satisfy yourself before the advertisement is aired that no breach will occur.  If in doubt, seek advice.

An edited version of this article was published in NZ Retail February 2008

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  Corinne Blumsky

  Partner