Feature: Free offers in free fall

According to the new edition of Roddy Mullin’s book on Sales Promotion, “the word ‘free’ is one of the most powerful available to promoters”. And, according to a study by research group IGD last year, the most compelling reason for trying a new product was a “buy one get one free” (BOGOF) offer. However, this faces an unexpected challenge from new laws arriving in May.

The Unfair Commercial Practices Directive has been knocking about in Europe for several years, dating back to a green paper on consumer protection in 2001. Despite regular consultation, the Department for Business Enterprise and Regulatory Reform (BERR) sent a shudder through the marketing industry at the end of February when it finalised proposals for how the Directive would be implemented into UK law. The draft Consumer Protection Regulations (or CPRs), laid in Parliament on March 3, contained a worrying clause stating that promoters were banned from “describing a product as ‘gratis’, ‘free’, ‘without charge’ or similar, if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item”.

According to Philip Circus, director of legal services at the ISP, the “proper” interpretation of these words is that only free samples or gifts that require no more than the normal cost of postage or delivery are permitted. “We believe that these words outlaw BOGOF offers and other free gifts with purchase when described as free,” he explains.

However, at a meeting of all the enforcement agencies in the European Union, the British stood alone when it decided that BOGOF and gifts with purchase generally ought still to be allowed despite the terms of the Directive. In the rest of Europe, where the rules have always been stricter, marketers must continue to curb the use of “gratuit” or “kostenlos”.

UK ministers as well as the Office of Fair Trading currently say they do not intend to change their stance on this, which would mean they see no need to change the existing rules on the use of the word “free”. This is already regulated through the Committee of Advertising Practice and the CAP Code, which sets strict rules on when something can be said to be “free” – and CAP does not intend to change its wording on this matter as part of the current Code review.

The UK government’s interpretation of the Directive is what matters, and it would be up to the European Commission to take court action against the UK if it believes the terms have not been properly applied. However, there still exists some uncertainty about what will happen after the Regulations become law on May 26.

The ISP along with the Advertising Association is putting pressure on ministers to provide clarification on the use of the word “free”. The Trading Standards Institute (TSI), which represents trading standards officers, does not believe the Regulations will lead to local authorities storming into branches of Iceland clutching court papers. “The response has to be proportionate,” explains David Sanders, lead officer on civil law at the TSI. “The Directive was not a stick to beat legitimate businesses. It’s a mechanism for steering and advising.”

Because of the British government and CAP’s stance, Circus says the ISP is not advising promoters to change their practice on these issues at present. “We see no reason why the industry should adopt this more restrictive approach until such time as there is a challenge that requires us to do so.”