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ASA rules against Virgin.Net deferred activation fee
Wednesday 02 August 2006 11:53:00 by Sebastien Lahtinen

The Advertising Standards Authority (www.asa.org.uk) has ruled against Virgin.Net on a public complaint regarding a banner advertisement which read "... Get broadband without the commitment. No 12 month contract. £14.99 a month ...". The complaint alleged the advertisement was misleading due to the £50 fee charged if the service was terminated within the first 12 months.

When a broadband connection is ordered, wholesale providers levy an 'Activation Fee', a setup charge used to cover the cost of setting up broadband on the line. Some Internet Service Providers do not charge this setup fee, but instead subsidise it on connection with a view to encouraging you to take up their service, usually with an associated one year (or in some cases multi-year) contract. The 'deferred activation fee' concept has been around for some time and allows a user to exit a contract early, by paying the equivalent of the activation fee. Logically, this is an entirely fair concept since the ISP incurred the cost on behalf of the user on the assumption it would get paid back over time by their extended custom.

The problem with the Virgin.Net ad was the claim that it was not based on a 12 month contract. According to the ASA ruling, Virgin.Net did not believe that the exit fee was sufficiently significant to warrant being highlighted in the banner as it was directing people to a website with more details. They further argued that banners frequently did not include specific conditions such as this by reference to competitors' banners. The ASA considered that the exit fee which was equivalent to three months' subscription, was sufficiently important enough that it should have been noted on the banner in the context of the wording used about commitment as to omit it lead customers to believe they could cancel without any obligation. What this ruling does make clear is that you cannot rely on the fact something may be an 'industry standard' when designing your advertising.

Banner adverts are usually small in size and therefore it can be difficult to include the full details of the offer that may be featured in the small print of traditional advertisements. An interesting idea to consider would be whether each banner could be accompanied by a 'Banner Small print' type link or an industry standard icon which links to a separate page or other way to provide text that contains the effective terms that need to be highlighted which would not be feasible in 'small print' on a banner, although whether such an idea would become standard practice is difficult to say.

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