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Marketing self-regulation: Time for a shake-up?

29th Jun 2009
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Laws don't always stop firms from manipulating or misleading customers. But should marketers be worried by new legislation investigating areas where self-regulation has previously turned a blind eye, asks Mark Stuart, head of research at the Chartered Institute of Marketing?

Legislation supported and complemented by a self-regulatory environment has a long tradition of helping companies stay on the straight and narrow in the UK, both legally and ethically. A law in itself doesn’t necessarily stop companies manipulating or misleading its customers, either with inaccurate promises or by omitting key pieces of important information. We have a robust self-regulatory environment in order to ensure that the spirit of the law is met, as well as by the letter.

Organisations such as the Advertising Standards Authority (ASA), the Direct Marketing Association (DMA), the Institute of Practitioners in Advertising (IPA) and the Incorporated Society of British Advertisers (ISBA) do a sterling job ensuring that this balance is struck. However, some recent examples of our self-regulatory environment being perhaps less effective than it should be are highlighted by the details of the Consumer Protection from Unfair Trading Regulations, brought onto the statute books last year. Part of the UK implementation of the EU Unfair Commercial Practices Directive, the CPRs are designed to create a level playing field for companies and introduce a ‘general duty not to trade unfairly’, requiring that traders act honestly and fairly towards their customers.
So far, so good, and nothing to indicate that the respectable, ethical company should have anything to worry about. However, it’s in the details of the ‘banned practices’ – a list of 31 specific areas that are not permitted in any circumstances – that indicate the new legislation is going to investigate areas that our self-regulatory environment has previously turned a blind eye towards.
Myths and reality
As an example, consider the poster for last year’s Tutankhamun exhibition at the O2 arena in London. The poster appears to show the legendary blue and gold funerary mask of the 19-year-old Egyptian king and would seem to imply that the mask was part of the exhibition. However, the mask was not part of the show, unlike the previous London exhibition in 1970, because the Egyptian authorities decided it was too fragile to travel. In fact, the image is of a small statue, known as a ‘canopic jar’, that would have been buried as part of the funeral effects.
As the image is taken looking up at the mask - a familiar photographic device that, arguably, makes things appear larger than they are - and because there is no sense of scale, such as a person in the same shot, you might well have gone to the exhibition expecting to see the famous mask and come away feeling somewhat short-changed. There were a significant number of complainants but, in this case, they were rejected by ASA as the image on the poster was of an object that was actually in the exhibition.
However, the CPRs might well take a different view under the ‘not being true to the terms of the endorsement’ clause. Broadly speaking, the CPRs are divided into ‘actions’ and ‘omissions’, so the new rules might apply if the promotional approach is ‘in any way likely to cause the average consumer to take a transactional decision they would not otherwise have taken’.
The CPRs also target areas like viral marketing. If you put clips on sites such as YouTube and MySpace, they must now be clearly identified as originating from a commercial company. The regulations tighten the rules on door-to-door selling. For example, if a salesperson continues to persuade the customer to buy his or her company’s product after having been told to leave, you’re breaking the law. And they also outline protection for ‘vulnerable groups’. Whilst defining the ‘average consumer’ is something that could keep legal teams busy for months, the new legislation makes a point of protecting sections of society such as children and the elderly.
More power to the elbow
The ASA and the other self-regulatory bodies that implement codes such as the CAP and BCAP Codes (the British Code of Advertising, Sales Promotion and Direct Marketing and its broadcast equivalent) have a difficult job trying to balance the varying needs of different stakeholders – customers, commercial companies, charities, advertisers, governmental and quasi-governmental bodies, and broadcasters. And it can be difficult to distinguish between ‘puffery’ – the legal practice of, for want of a better expression, ‘bigging up’ a product and service – and deceit. However, the implementation of the CPRs would seem to indicate that the Unfair Commercial Practices Directive is going to take a much tougher line on companies’ promotional activities than has been the case in the past.
It’s currently unclear to what extent the CPRs will be enforced, as there have been few test cases so far. However, with the possibilities of a £5,000 fine (the statutory maximum) and/or two years’ imprisonment for non-compliance, it would be well worth every company director or manager spending an hour or two familiarising themselves with the details of the UCPD, the UK implementations of which include the 'business protection from misleading marketing regulations' as well as the CPRs.
In theory, there’s nothing that the responsible company should have to worry about – but it’s worth reading the new legislation carefully, just to be on the safe side.



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