Types of claims: “Established since …”


INSIGHT
Published
Jan 12th '21
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Marketers claiming that their business has been established for a specific number of years or implying that their business has been established for a long time should hold documentary evidence.

 

A consumer’s transactional decision may be affected by claims that a company is well-established or has a long history, especially in industries that might have a high level of failed or bankrupted companies. As such, unless the claim can be supported by evidence which demonstrates that it is accurate, a claim that a business has been established for a certain duration of time is likely to be considered misleading. Consumers buying products that are backed by guarantee, especially those that claim to be valid for a long time (for example double glazing), want reassurance that that company will still be around should they need to invoke that guarantee.

 

A company (X) might have bought an existing or liquidated company (Y). It is likely that X wants to adopt Y’s brand heritage by continuing to advertise Y’s business name as a trading style and referring to Y’s trading history. That approach is likely to be acceptable provided the purchasing business (X) can demonstrate that it has assumed the liabilities of Y, by paying Y’s debts, for example, and honouring Y’s guarantees.

 

In 2016 the Advertising Standards Authority (ASA) considered that the claim “KPIGC has been enriching businesses from multiple jurisdictions and from various backgrounds whether big or small, new or established since 2006” would be understood by consumers to indicate that the company had been operating since 2006. Because the advertisers did not provide any documentary evidence to demonstrate that this was the case, the claim was considered misleading (KPI Gaming Consultants, 13 July 2016).

 

Similarly, a complaint about an ad which stated “Providing Solutions for Professionals SINCE 1991” was upheld by the ASA in 2017. In this case, the ASA understood that the claim was based on Healden Grove inheriting the reputation and trading history of an earlier incarnation of the same company which was initially created as a partnership in 1991, and considered that this would have been acceptable provided it could be supported with robust documentary evidence. However, the advertisers did not provide evidence which demonstrated that Healden Grove had inherited the reputation and trading history of the former partnership upon its incorporation as a limited company in 1997, and as such, the claim was considered misleading (Healden Grove, 1 March 2017).

 

If the marketer can demonstrate a period of continuing trade, it should be acceptable for a business to refer to that heritage even if its trading name has changed or the business has moved premises during that period. The ASA considered that the claims “WALTONS EST. 1878” and “EST. 1878”, which were seen in an ad for a cabin retailer, were not misleading, because although ownership of the “Walton” brand had changed on several occasions, the advertiser had provided sufficient information showing that it had been maintained and had an uninterrupted trading history since 1878 (Rosimian Ltd, 10 February 2016).

 

In certain circumstances, the law regulates what claims are permitted, especially if a purchased business run by the same people had gone into insolvent liquidation or if competing claims to ownership of the goodwill and a likelihood of confusion exist.

 

Source: Committee of Advertising Practice (CAP)

 

Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the ASA. CAP’s Advice Online entries provide guidance on interpreting the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing.

 

How can we help!

Whether or not something breaches the Code in this way can often be a fine line – marketers who are unsure whether their ads are likely to breach the Code are invited to contact the Copy Advice team.

 

At LS Consultancy are experts in Marketing and Compliance, and work with a range of firms to assist with improving their documents, processes and systems to help mitigate risk.

 

Contact us today for a chat or send us an email to find out how we can support you in meeting your current and future challenges with confidence.

 

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