The Advertising Standards Authority (ASA) has recently shared guidance on how to advertise “free trials” responsibly.
In our previous blog, we discussed how The Competition and Markets Authority has taken an interest in the area of subscription-based contracts, which often contain “auto-renewal clauses”, whereby the agreement will auto-renew unless the consumer cancels. “Free trials” can be an excellent way to appeal to new customers and frequently goes hand-in-hand with subscription-based contracts. Often when a “free trial” of a service ends, the customer will automatically enter into a subscription-based contract.
As consumers are feeling the pressure of increased costs of living, there has been an increased demand for “free trials”, which are particularly common in the food, entertainment, beauty and leisure sectors. Businesses should be mindful that there are certain rules which govern advertising a “free trial” and the ASA has helpfully shared its top tips:
- When can you use the phrase “free trial” when advertising?
The CAP Code (rule 3.26) states that ads must not use the term “free trial” to describe “satisfaction or your money back” offers, or offers for which a non-refundable purchase is required. In order to use the phrase “free trial”, whatever is being offered must be genuinely ‘free’ to the consumer. If there is an additional ‘delivery’ element to a free trial, it is acceptable to charge the genuine, un-inflated cost of postage – but you cannot charge for packing, packaging, handling or admin fees if you want to claim that it’s ‘free’.
- How should we communicate a “free trial” with a consumer?
The ASA’s guidance states that it is important consumers are aware of exactly what the arrangement is that they are entering into and the extent of the commitment they must make. Therefore, all material information and significant conditions must be made clear upfront. This includes, but is not limited to:
- what a consumer needs to do to take up the free trial;
- whether a paid subscription contract starts automatically (after the trial) unless cancelled;
- how and when to cancel, if the arrangements for doing so differ from what consumers might reasonably expect;
- the extent of the financial commitment if the subscription is not cancelled during the trial; and
- any other significant conditions: for example, the end date for starting the “free trial” or limitations on who can take up the ‘free trial’ such as new customers only.
It is therefore important that businesses operating this type of “free trial” model consider how a “free trial” is advertised to consumers and have robust terms and conditions in place that take into account this guidance. As the ASA states, simply stating “T&Cs apply”, “See website for terms” or similar, is unlikely to be considered sufficient to make the relevant conditions clear to consumers.
Squire Patton Boggs’ consumer and advertising law experts are supported by a public policy team who can advise on navigating these issues and ensuring that the voice of business is heard by lawmakers. Squire Patton Boggs specialises in consumer law and regulation. For more information contact partner, Carlton Daniel and associate, Sera Kaplan.