What does “free” really mean?
Whether we are shopping on the high street or online, we are all continually bombarded with offers of “free” goods or services. These can range from “buy one get one free” offers in supermarkets, to internet or phone contracts with an offer of an initial “free” period.
“Free” offer promotions aim to provide an incentive for a customer to buy a product or service, or to build or maintain brand awareness, and are perceived to be key marketing tools which have a significant impact on sales. But what does “free” really mean? When can a supplier tell customers that something is “free”?
The answer to the above questions is found by navigating the regulatory maze for advertisers which consists of general advertising law and regulations, and more specific laws, regulations and codes of practice affecting sales promotions. The key legislation and other rules in this area are:
- the UK Code of non-broadcast Advertising, Sales Promotion and Direct Marketing (CAP Code) which is the main regulatory code affecting non-broadcast sales promotions; and
- the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) , which introduce a very high-level general prohibition on traders carrying out unfair commercial practices.
The CAP Code and its help note on free offers include helpful guidance on these sorts of promotions. The main points of the CAP guidance are as follows:
- Customers’ liability for costs should be made clear in all material featuring the offer.
- Products or services cannot be described as free if the quality of the product or service that customers must buy has been reduced.
- Advertisers should not charge for packing, handling or administration.
- Advertisers should not try to recover their costs by reducing the quality of composition or by inflating the price of any product or service that must be bought as a pre-condition of obtaining the free item.
- Advertisers should not use the term “free trial” to describe “satisfaction or your money back” offers or other offers where a non-refundable purchase is required.
In addition, since 26 May 2008, free offers must also comply with the requirements of the CPRs. Schedule 1 to the CPRs includes a list of 31 practices that will always be unfair. For example, an advertiser is prohibited from describing a practice as “gratis”, “free”, “without charge” or in a similar way, if the consumer has to pay anything other than the unavoidable cost of responding to the promotion and collecting or paying for delivery of the item.
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