1. Don’t exaggerate
Internet advertising came under scrutiny last year, after the Advertising Standards Authority (ASA) started monitoring online adverts for misleading messages. Complaints are up 30 per cent as a result. Attracting most was Groupon which, in December 2011, became the first advertiser since Ryanair in 2008 to be referred to the Office of Fair trading (OFT). The online discounting website broke UK advertising regulations 48 times in 2011 by exaggerating potential savings from its deals, making offers which were not actually available and failing to make clear significant terms and conditions. “Given Groupon’s track record, we have serious concerns about its ability to adhere to the advertising code,” said the ASA. The OFT’s investigation is likely to take at least six months.
2. Deal with complaints
Ofgem fined Npower £2m in October 2011 after the energy supplier failed to record all details of the complaints it received, did not give customers enough details of the redress service offered by the energy ombudsman, and didn’t put in adequate processes to deal with complaints. "Consumers have a right to expect that energy companies will comply with the standards,” says Ofgem senior partner for sustainable development Sarah Harrison. “Npower failed to do so and, although it took remedial action, it has incurred a penalty for failing consumers.” Just four months previously, British Gas was fined £2.5m over complaints handling, and Ofgem is currently investigating the way EDF Energy, another of the big six energy suppliers, handles its complaints. Marketers in other sectors are not immune – watchdogs will be hot on the heels of any that fail to deal with customer complaints quickly and fairly and are increasingly expecting marketers to view complaints as a means to improving their service.
3. Don’t confuse or mislead
A report in October 2011 by Ofgem suggested that the profit margin for energy companies had risen excessively and, by December, the energy regulator had ordered firms to dramatically simplify the way they charge customers as part of a drive to push down prices. It also ordered all firms to offer one standard tariff, with a standing charge set by Ofgem, so that customers can more easily compare prices. Meanwhile in the finance sector, September saw the OFT investigating allegations of complex charging and poor information for travellers. Banks and credit card companies have since agreed to scrap some charges they levy on holidaymakers buying foreign currency and to give “clearer, more accessible” information about charges for using cards abroad. Many foreign exchanges have agreed to review marketing practices, particularly their use of “0 per cent commission” deals, and firms are also promising to display other costs more clearly in their monthly statements. “No one should be allowed to drag their feet in implementing the changes,” said Consumer Focus chief executive Mike O’Connor. “Companies are very quick to find new ways to add costs for consumers, but can be painfully slow to unravel the tricks and the complexity of these charges. Making markets simpler and fairer must be a priority for 2012.”
4. Tell customers what they are signing up to
The premium rate regulator Phonepayplus is clamping down on smartphone apps that charge users without their knowledge or consent. By the time it began its consultation with the telecoms and digital industries on app based mobile phones in September 2011, it had already come across two cases in which smartphone users incurred charges via premium text messages without being warned. One of them, the Better Battery app, was identified as containing coding that provided access to the handsets’ text-messaging functionality, leading people to inadvertently sign up to a fee based video service. "Apps enrich the lives of millions of consumers and children and are an important part of the UK's digital economy," said PhonepayPlus. "We are taking positive action to ensure that rogue providers do not damage consumers' enjoyment of apps or harm the UK's growing digital creative economy.”
5. Avoid cold calling
“Five of the big six energy firms no longer sell on the doorstep, so the pressure is on for E.ON, the only remaining firm not to make this commitment,” says Consumer Focus spokesperson Emma Adler. The pressure to stop unsolicited sales won’t stop with door-to-door calling, she adds. “For marketers in 2012, watchdogs will be keeping a keen eye out to make sure bad practice that existed on the doorstep is not transferred to telephone sales.”
6. Declare paid-for celebrity endorsement
Early last year, the OFT began a crackdown on Twitter users and bloggers using their online presence to endorse products and companies without clearly stating their relationship with the brand. It all kicked off when the OFT brought a case against a PR firm that paid bloggers to promote its clients.
Is marketing over-regulated? Do bad marketing practices drive customers away?
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