Legal insights: advertising rules on promotional offers

Offer a 50% discount, but be 100% clear.

Everybody loves a good deal. Whether a great promotion pops out at them on the pages of a magazine, or they are moseying through the mall and discount ticket catches their eye. People are easily enticed to have a closer look. But, just how closely do consumers need to look to make sure they are not being caught out by tricky T&Cs?

Misleading the consumer is fast becoming a no-no in the eyes of the law. Offering your customers a discounted price is nothing new, but the catch comes in when these offers are made subject to terms and conditions (T&Cs) that catch the consumers off-guard. A good example of this is a fair usage policy on an offer for unlimited data. Many people may find this provision misleading, and, had they been directly informed of the hidden condition, they may not have taken up the offer.

Suppliers argue that it is the duty of the consumer to read the T&Cs. However, the question is now being asked if it is enough to advertise a price together with "T&Cs apply", or whether the supplier is now obliged to draw the consumer's attention to the applicable T&C clause in the main text of the promotional offer, says Sergio dos Santos, Webber Wentzel, candidate attorney.

As this is a fairly new issue being debated, we need to look at laws and authorities that are available to us to predict an answer.

The Consumer Protection Act

Although the Consumer Protection Act (the Act) does not specifically deal with the above question, it does provide a guide regarding pricing and marketing to consumers. There are five sections that can be seen to help us with this issue:

  • Section 34 of the Act requires that the nature of the price reduction is to be made clear to the consumer. From this we can assume that a discount should be communicated in a clear manner, but it still raises the question of whether it needs to appear in the main text of the promotional offer.
  • Following on from this, Section 48 prohibits any unfair, unreasonable or unjust marketing to consumers, which includes any misleading promotions. If a disclaimer on a discount does not appear clearly in the main text, it could be argued that this could create a misleading impression in the mind of the consumer when the offer is accepted.
  • Then Section 49 of the Act goes on to say that consumers need to be made aware of any risks that they could not reasonably be aware of, associated with the promotion. This should be done in plain language, and in a manner that the consumer's attention is drawn to it. So if a disclaimer appears in the T&Cs and not in the main text, then it cannot necessarily be said that there was an attempt to draw the consumer's attention to the risk.
  • Section 23 of the Act also deals with the display of prices, and requires that prices are adequately displayed so that the price can be reasonably inferred. This would arguably not be the case if a disclaimer on any discount offered is not clearly communicated to the consumer.
  • Finally, section 41 makes a very important point when dealing with promotions. It says that goods or services should never be marketed in a manner that creates a false impression on an important fact, such as pricing, or where that fact is not disclosed. It is clear that should a supplier fail to clearly communicate the true nature of any pricing, the consumers would be well within their rights to claim that the promotional offer was misleading.

Given these points, it can be argued that the Act does require promotional T&Cs to be clearly communicated in the main text of a promotional offer. There is, however, currently no definitive answer as the law is always open to more than one interpretation.

Advertising Standards Authority Code of Conduct

A good test for what is legally acceptable or not comes from the findings of the Advertising Standards Authority (ASA). Should a supplier be a member of the ASA, it will be bound by the ASA's Code of Conduct regulating the advertising of goods and services.

The Code of Conduct, however, is actually silent on how promotional offers should be advertised, but it does require that advertisements should not contain any statement or visual representation which, directly or by implication, omission, ambiguity, inaccuracy, exaggerated claim or otherwise, is likely to mislead the consumer. This could strengthen the argument that a promotional offer could be misleading if it only places certain disclaimers in the T&Cs.

This code only applies to members of the ASA. However, the ASA codes do offer a basis on which to work, and if consumers believe they have indeed been misled, there is nothing stopping them from using this information when approaching other authorities, such as the courts, for relief.

A good example of where the ASA has stepped in and made a decision around this matter is in the case P Van Zyl v The Gadget Shop 2018-7434F.

P Van Zyl v The Gadget Shop 2018-7434F

In this ASA dispute, the Gadget Shop ran a promotion offering "30% off everything", but they did not clearly display a disclaimer excluding some items. The ASA found in favour of Van Zyl, saying clear reference should have been made to such a disclaimer. They based their decision on whether a reasonable person reading an advertisement would be misled by its claim after considering it objectively and holistically. Although this decision is not binding on non-members, a ruling of the ASA still provides a line of reasoning for other authorities such as the courts.

When one considers this ruling, it seems to be synonymous with the provisions of the Act. Suppliers may have to clearly mention any disclaimer in such a manner that a reasonable person will see it.

This issue is still very ambiguous and there does not seem to be any clear authority on it. Should a consumer feel aggrieved, there is strong argument to be made in their favour through the relevant sections of the Act as well as the ASA Code of Conduct. So we would urge suppliers to display all disclaimers in the main text of their advertising. Rather be as clear as possible than open yourself up to an unnecessary dispute that could cost you more than you would have earned.​​​