In the matter between:
MICHELLE REINHARD
Complainant
and
FURNITURE CITY
A division of RELYANT TRADING (PTY) LTD
Respondent
6 March 2007
FURNITURE CITY / M REINHARD / 8214
Ms Reinhard lodged a consumer complaint against in-store advertising for a mattress at a Furniture City outlet, as well as a brochure inserted in the Randburg Sun.
The in-store advertisement states, inter alia, as follows:
“R 2799
DEPOSIT R 280 R 131 X 24”.
The brochure contains various different items listed at a price and indicating instalments.
COMPLAINT
In essence, the complainant submitted that despite having paid a higher deposit of R500,00 on the product advertised in-store, the total monthly premium did not decrease, but actually increased to R230,00. The increase was attributed to, inter alia, additional charges for a magazine subscription, insurance, delivery charges and an admin fee. Subsequently, after much debate, certain charges were removed, but the total instalment still amounted to R133,00 which is higher than the advertised rate, despite the larger deposit. Upon scrutinising the respondent’s print advertising, the “terms and conditions” were found at the bottom of the last page in small print.
RELEVANT CLAUSES OF THE CODE OF ADVERTISING PRACTICE
In light of the complaint the following clauses of the Code were taken into account:
* Section II, Clause 4.2.1 – Misleading claims
* Section II, Clause 19 – Pricing policy
RESPONSE
In essence, the respondent submitted that:
• Its advertising states, “all terms calculated with a deposit and include VAT and finance charges, but exclude delivery and insurance charges.” It is normal practice in the retail industry to exclude these variables, as they do not always impact on the advertised price. The complainant was still able to purchase the mattress at the advertised cash price.
• The advertisement supplement and website advertising clearly state “terms and conditions apply” and “subject to credit approval.”
• The variables complained of were offered to the complainant and when she declined same, they were removed from the deal. It is normal practice in financed sales for the credit provider to insure the debt and to charge interest on such insurance. The administration fee of R185,00 is charged to cover the costs of initiating the agreement.
ASA DIRECTORATE RULING
The ASA Directorate considered all the relevant documentation submitted by the respective parties.
Clause 4.2.1 of Section II states, inter alia, that advertisements should not contain any statement which, directly or by implication, omission, or ambiguity, or exaggerated claim is likely to mislead the consumer about the product advertised.
Clause 19 of Section II states, inter alia, that any quoted price should be a true reflection of the amount actually to be paid. Should additional costs apply, consumers should be informed of this in a clear and prominent manner.
The complainant submitted that she happened across the in-store advertisement while visiting the respondent’s outlet after viewing its brochure inserted in the Randburg Sun. Initially, she intended to purchase one of the beds advertised in the brochure, but elected to rather purchase the bed referenced above.
The Directorate’s decision therefore, will include consideration of both the brochure and the in-store advertisement, as the complainant was initially persuaded to visit the store by the brochure, but subsequently took issue with the in-store material.
The mattress is advertised in-store for a R280,00 deposit and 24 monthly instalments of R131,00. However, the complainant had to pay R133,00 over 24 months despite having paid R500,00 as a deposit.
It appears from the documentation before the Directorate that it is theoretically possible to purchase the mattress at the advertised terms. However, the only way this appears possible is if the purchaser:
1. Has existing insurance, where the respondent’s interests are recorded,
2. Has transport to avoid having the goods delivered (The Directorate is aware that certain furniture stores insist on delivering when credit purchases are made to confirm residential address. See for example Russells Stores / JB Knowles / 367), and
3. Is, for some reason, not held liable for the additional and mandatory administrative charge of R185,00 levied by the respondent.
The Directorate notes the respondent’s submission that it is impossible for an advertiser to advertise each price combination, as various factors could influence what a consumer pays.
In this respect, it is noted that the advertised terms and conditions, even if they are available if all optional costs are removed, are such very few people would qualify. The Directorate is of the opinion that in a situation where it is impossible to advertise all permutations, the most usual terms should be highlighted. This is clearly not the case in the matter at hand.
The material at hand, in any event, indicates that even when paying a larger deposit than that required, the customer is not able to obtain the bed at the indicated price, despite certain of the additional costs being waived. The respondent’s comment that consumers are still able to purchase its items at the cash price is irrelevant, because the cash price is not disputed, but rather the purchase on terms. It appears from the material before the Directorate that it is, in fact, actually impossible to secure the advertised terms.
In addition, the in-store material makes no mention of any additional costs, nor does in indicate that there are any conditions attached to this offer.
From the above, it is clear that the in store material is misleading as the indicated price of instalments is not an accurate reflection of what the consumer would have to pay.
The only material difference between the in-store advertising and the brochure is the disclaimer that appears in small print at the end of the brochure.
The complainant advised that the terms and conditions listed on the respondent’s brochure, tucked away in small print on the back of the last page were of no help.
The respondent relied on this disclaimer arguing that it makes it clear that “all terms [are] calculated with a deposit and include VAT and finance charges, but exclude delivery and insurance charges.” In addition, the respondent argued that it is not practical to illustrate all possible purchasing scenarios, because these will fluctuate depending on the customer’s personal financial circumstances. The other optional extras complained of were removed from the offer at the complainant’s request.
As indicated above, the Directorate accepts that it is not practical to include all possible price combinations. However, what the Directorate has to determine is whether or not the advertising as a whole is likely to mislead consumers about the price payable.
In the matter Russells Store / Mr B Mkhize / 1410 (18 October 2004), the Directorate upheld a similar complaint and reaffirmed a previous decision by the Advertising Standards Committee (the ASC) that the consumer’s liability to pay such costs as insurance must be stated prominently.
The Directorate also ruled, “When viewed as a whole, the advertisement complained about does not appear to clearly communicate the necessary mandatory charges and conditions to the consumer. The words ‘ALL TERMS EXCLUDE INSURANCE AND HANDLING CHARGES’ are in a small print at the bottom of the advertisement. This is neither prominent nor clearly visible, and fails to communicate the extent to which the additional charges apply. In addition, the advertisement does not state that the suite is available ‘from’ the quoted price which might clarify that other charges might be levied.”
A similar principle applies to the matter at hand. When viewed as a whole, the brochure does not clearly communicate the necessary mandatory charges and conditions to the consumer. In fact, the price is indicated as “NOW ONLY…” implying that all relevant charges are included in the advertising. If anything, the disclaimer at the bottom of the last page merely serves to correct a misleading impression already created earlier in the advertising material.
The brochure therefore is likely to mislead consumers into believing that the advertised item is available to purchase at that rate, which they can in fact not do under normal circumstances because of additional mandatory charges, which are not clearly disclosed.
Based on the above, the material is in breach of Clauses 4.2.1 and 19 of Section II of the Code.
Given the above:
• The advertisements must be withdrawn;
• The process of withdrawing the advertisements must be actioned with immediate effect on receipt of ruling;
• The withdrawal of the advertisements be completed within the deadlines stipulated by Clause 15.3 of the Procedural Guide; and
• The advertisements may not be used again in its current format.
The complaint is upheld.
