Studies made on the language that consumers respond to in advertising suggest common words such as “you” and “save” can be particularly persuasive. Use of the term "free", however, divides opinion.
Overuse of the word "free" is likely to dilute the impact such a term has on consumers and potentially lead to a perceived lack of credibility. Consumers arguably have an inherent scepticism when a product or service is advertised as “free”, questioning whether “free” does in fact mean receiving something for nothing.
As well as damaging a business' reputation, however, careless and improper use of the term could lead to businesses receiving fines from the Advertising Standards Authority.
When can an item be advertised as “free”?
In the UK, the use of the word “free” to describe a product or service in advertising is tightly regulated. For further information on the strict circumstances in which a product or service can be described as “free”, see the joint Committee of Advertising Practice and Broadcast Committee of Advertising Practice “Guidance on the use of free”, which builds on the existing provisions in the CAP and BCAP advertising codes.
The general rule is that marketing communications and advertisements must not describe a product as “free”, “gratis”, “without charge” or similar if the consumer has to pay anything other than the unavoidable cost of responding to the communication or advertisement and collecting or paying for delivery of the item.
Marketing communications and advertisements must make clear the extent of the commitment the consumer must make to take advantage of a “free” offer. Items cannot be described as “free” if:
- the consumer has to pay for packing, packaging, handling or administration charges;
- the cost of response, including the price of a product that the consumer must buy to take advantage of the offer, has been increased, except where the increase results from factors that are unrelated to the cost of the promotion; or
- the quality of the product that the consumer must buy has been reduced, for the purposes of “buy one get one free” deals.
Types of “free” claim
Pure “free” claims
Where a consumer receives something for nothing, such that no money (except, if applicable, the cost of postage or carriage) passes from the consumer to the marketer, the use of “free” is straightforward. “Free” samples handed out to passers-by are a common example.
However, the restrictions can be difficult to navigate when considered in the context of combined offers. There are two categories of combined offers: conditional purchase offers and package offers.
Conditional-purchase offers
Conditional purchase offers are offers whereby a product or service is advertised as being “free” on the basis that the consumer has purchased another product or service.
Use of the term "free" is possible in such circumstances providing the quality or composition of the paid-for items has not been reduced, and the price for the paid-for items has not been increased. Such restrictions prevent advertisers from offering a “free” item and absorbing the costs of the promotion by reducing the quality of the paid-for item.
The customer has the right to believe that the marketer will not directly seek to recover any of the cost of the free item by marking up the price of the item that has to be bought or by the substitution of inferior merchandise.
The guiding principle is that the item described as “free” must be genuinely separate from and additional to the items that the consumer is required to pay. A free offer can be shown to be a conditional-purchase offer if the paid-for item(s) may be bought without the free items and has a stand-alone price and/or the paid-for items is normally sold for the same price without the item described as “free”.
Package Offers
There are also specific regulations which relate to what can be advertised as “free” when offering packages of goods or services, and when running an introductory offer. In such circumstances, the use of the term “free” to describe an element of a package is prohibited if the cost of that element is included in the package price. Unless, that is, consumers are likely to regard a particular element as an additional benefit because that element has been recently added to the package without increasing the price.
For example, a mobile-phone subscription may offer a certain amount of airtime, a certain number of text messages and a voicemail facility for one all-inclusive price. Each element is intrinsic to the quality and composition of the package being advertised for the package price. Because customers cannot exercise genuine choice over how many elements they receive for the price paid, the elements are all included in the package price and may not be described as “free”.
The prevailing principle is that the “free” product or service must be genuinely “free”. To demonstrate this, advertisers must carefully consider whether any cost of the “free” item is passed on to the consumer.
“Free” Items in Practice
One sector well-known for advertising goods and services for “free” is online gambling. Due to the fierce competition between online gambling sites, offers of “free” bets or account credits are regularly used as marketing tools.
However, online gambling sites have fallen foul of the regulations on various occasions, for example, in offering “free” bets without expressly stating that the “free” bet was conditional on the consumer betting the same amount. Failure to prominently display the terms and conditions of a “free” promotion has also caused such sites to infringe the regulations. In one particular instance, an online gambling site advertising a £40 “pay-out” if the participant made a particular bet, was held to have breached the regulations because the site did not specify clearly enough that the pay-out would not be in cash, but rather in additional “free” bets.
In the past 3 years, the ASA have also investigated complaints against numerous other high profile businesses in relation to using false “free” claims including, amongst others, Amazon, Holiday Inn Express and Boots.