Every business markets its products and services using strategies and methodologies tailored to suit its own ambitions and customer base. Marketing opportunities change constantly and now include social media, web and app sales, interactive TV and SMS along with more traditional channels. Marketing can cover a vast range of promotional activities from “buy one, get one free” leaflet drops to sophisticated multimedia, multi-jurisdictional advertising campaigns.
Whatever mechanic or method suits your business, it is important to make sure you get it right – errors in this arena are highly public and mistakes can cost reputations as well as money. Practically all marketing activities have a legal dimension and need to be taken seriously. We can advise you on avoiding the legal pitfalls – making sure that you stay within the law and protect what is yours.
Most advertising is subject to control and in the UK, this is achieved through legislation and industry self-regulation.
The main legislation in this area is the Consumer Protection from Unfair Trading Regulations 2008 (as amended by the Consumer Protection (Amendment) Regulations 2014) (“CPRs”) and the Business Protection from Misleading Marketing Regulations 2008 (“BPRs”). In addition there is legislation affecting particular products and services, for example, financial services, pharmaceuticals, alcohol and tobacco.
Publishers of advertisements which include statements about products or prices may find themselves the subject of an action under the CPRs if such statements are unfair commercial practices. Businesses could face costly criminal fines and, in certain circumstances, consumers themselves could have a direct civil right of action against a business for unfair commercial practices. In the context of advertising, “unfair commercial practices” include misleading or false statements or omissions concerning the product in question or aggressive advertising practices. To avoid costly reprinting, wasted media space and even product recalls, it is important that advertising copy (particularly on-pack) is properly screened and copy checked to make sure relevant codes and further legal requirements are complied with.
Comparative advertising is also regulated by the CPRs and BPRs, depending on whether the target audience are consumers or businesses.
Advertising is also subject to self regulatory control, for example, The British Code of Advertising, Sales Promotion and Direct Marketing (“the CAP Code”). The CAP Code is one of the main controls on non-broadcast advertising and all advertisers should be familiar with it. It is enforced by the Advertising Standards Authority (“ASA”) and complaints can come not only from the public, but from competitors. Non-compliance carries serious negative publicity and can lead to withdrawal of campaigns.
Advertising over broadcast media is covered by other codes such as those issued by the Broadcast Committee of Advertising Practice in partnership with OFCOM. In addition, some sectors have their own codes e.g. the Direct Marketing Association and PhonepayPlus.
Sales promotions come in many different forms and use many different delivery mechanics including on-pack, mailshots, web, app, TV and radio. They may typically include:
- free offers;
- money-off next purchase;
- voucher codes/token collections;
- prize draws and competitions; and
- pricing claims.
The CAP Code includes rules specific to the running of sales promotions. Each promotion has its own issues and the terms and mechanics of each promotional offer need careful review to ensure it is compliant with the CAP Code and any other applicable regulations.
Competitions and Prize Draws
These are perhaps one of the most popular forms of sales promotions, and considered to be suitable for promoting many different types of goods and services. This is a particularly complex legal area as many lotteries and competitions are illegal. This is regulated by the Gambling Act 2005 and the ASA’s guidance on gambling advertising. Careful consideration is needed to minimise the risks of infringing this legislation. Also, when using social media platforms such as Facebook, Twitter or Tumblr to run promotions, promoters should ensure that they also comply with the rules of the media platform in question.
Sales promotions linked to price reductions or pricing claims are also specifically covered by the CAP Code and also by the Pricing Practices Guide. Complaints often arise because of confusion created by pricing offers and claims. Advertisers must bear in mind that under the CPRs it is a criminal offence to give a misleading statement about price.
Promotions linked to charities raise special considerations, principally under the Charities Act 1992 and associated legislation. The CAP Code also specifically addresses charity-linked promotions. The controls are stringent because of the risk of misleading the public about the extent to which a charity may benefit from any particular promotion. The legislation therefore affects the information that has to be given in any promotion, and also requires comprehensive written agreements between the charity and the advertiser clearly setting out the benefits to the charity and the obligations of the promoter.
Internet and Social Media
The use of the internet, e-mail and social media has seen an increase in the number of potential consumers who can be reached world-wide by both advertisements and sales promotions. With these come the complications (both practical and legal) of advertising or promoting in numerous jurisdictions. Even within the EU, promotions that are lawful in the UK may not be lawful in other territories and advice needs to be taken in relation to any pan-European campaign. Promoters may want to make sure that only UK entrants can apply and should seek advice to ensure that exclusions of overseas participants are effective.
Advertising Agencies and Fulfilment Houses
Even relatively simple sales promotions can involve a number of relationships which should be documented and a contract put in place. The need for clear contractual commitments is greatly increased in high profile or strategic advertising and marketing campaigns.
Typically businesses will employ both above the line (“ATL”) and below the line (“BTL”) advertising agencies, sales promotion houses and even design agencies. Written agreements should outline the responsibilities of both parties clearly, covering such matters as copy and print authorisation procedures, responsibilities for legal compliance, ownership of intellectual property rights, a detailed charging mechanism and any exclusivity. It may be left for each agency to then make its own arrangements, for say printing, media space, etc. but the advertiser should have confidence that these arrangements are being put in place. Where large sums of money are at stake, the advertiser may want to put in place its own arrangements to make sure that important suppliers are paid on time. Written contracts should also be in place for the sourcing of goods or prizes and for the general fulfilment of sales promotions – often undertaken by a handling house.
If these sorts of arrangements are not finalised before an offer goes live, there is a real risk that the advertiser will not be able to fulfil the offer and will waste valuable business time.
Data Protection, Direct Marketing and Cookies
Any form of marketing which involves using names, addresses, telephone numbers or e-mail addresses of people has data protection implications. All personal data must be obtained and held fairly and lawfully – failure to comply with data protection legislation may make it impossible to use data you have collected and so damage one of your most valuable assets. Whether you are constructing your own customer database or buying in lists for direct marketing purposes, or appointing others to do this for you, the data protection implications should be considered.
Intellectual Property Rights
Copyright, patents, trademarks, design rights are some of the intellectual property rights that are created and/or involved in the context of the design of advertising materials and promotional techniques. For example in the use of:
- a character’s name or image;
- music or images written or created by someone else;
- your business’ name on someone else’s goods; and
- agencies or freelancers to write copy for your business.
These activities create potentially valuable intellectual property rights and your business should make sure it protects its position by addressing ownership and/or licensing in written agreements.
Sponsorship and Endorsement
There are commercial advantages to positioning a brand name, trademark or logo with an event or product, or even an individual. Although often expensive, such deals can result in lucrative profile raising and much sought after kudos. The sponsoring business must feel comfortable that its name or logo will appear in the right place with sufficient prominence. It is important to know what you are getting and that your sponsorship is not overshadowed by other sponsors (particularly any competitors) and does not become associated with an inappropriate product or reputation. Anyone seeking to sponsor an event or product should ensure an appropriate written contract is in place protecting the use of its name and the commercial benefits that it is getting.
Businesses should also bear in mind that online testimonials and endorsements will constitute advertisements where the business controls the message, for example where a vlogger (i.e. video blogger) is paid to promote a product or service on a social media platform. These are therefore subject to the CAP Code and all other applicable regulations and, in particular (and as with all advertisements), any such testimonials and endorsements should be clearly identified upfront as advertisements.
How Can Stevens & Bolton LLP Help?
The commercial lawyers at Stevens & Bolton LLP have considerable experience in advising both businesses and agencies on advertising and promotional issues. Areas of advice include:
- agreements - advertising agencies, sponsorship, fulfilment;
- sales promotion activities;
- data protection advice;
- protecting intellectual property rights;
- comparative advertising issues; and
- copy clearance - advertising claims, pricing claims.
For further information, please contact Beverley Flynn or Beverley Whittaker on 01483 302264
This information is necessarily brief and is not intended to be an exhaustive statement of the law. It is essential that professional advice is sought before any decision is taken.
© Stevens & Bolton LLP October 2016