An investigation by the former Office of Fair Trading into the use of so-called ‘bait advertising’ by a firm marketing low-cost iPhones has identified a legal issue which suggests many estate agents may inadvertently be breaking the law.
Back in the summer of 2010 Markco Media advertised online that it would be selling a limited number of Apple iPhone 4 handsets for £99 - the normal retail price being £499 - at a specific date and time. To be eligible to purchase the handset, consumers had to subscribe to the Groupola website and sign up to receive daily email alerts from Groupola.
As a result, 14,561 consumers subscribed to be eligible for the sale. According to a press release issued by Markco Media at the time, over 'five million' users attempted to visit the website within the sale period.
During the sale an online ‘progress bar’ indicated there were over half the amount of iPhone 4s still available; above this was a caption stating '202 bought'. Soon after the promotion in question concluded Markco Media stated that “We can confirm that we had 200 handsets available, and these have now sold out.”
Subsequent questioning from the OFT discovered that Markco had, in fact, only eight iPhones available at the discounted price. The OFT ruled that Markco Media may have been operating in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).
In a lengthy and detailed ruling, discovered by former Zoopla journalist Nigel Lewis, a key sentence which will be of concern to estate agents reads:
“As a result, this caused or was likely to cause the average consumer to take a transactional decision that would not have been taken otherwise constituted unfair commercial practices, contrary to Regulation 3 (4) (d) under the provisions of paragraph 5 of Schedule 1 of the CPRs”.
The OFT's successor body, the Competition and Markets Authority, has confirmed the regulation now also applies to estate agents.
The ever-diligent Chris Wood of Cornish agency PDQ Property raised a similar question four months ago when he blogged under the title “Why can’t I keep my home marked as ‘For Sale’?”.
His blog - examining why a seller may think an agent was being negligent in advertising a home as ‘under offer’ or ‘STC’ instead of ‘For Sale’ when the vendor has requested it still to be marketed - points out that the agent is merely abiding by the law.
“Whilst it seems entirely logical to mark a property as ‘for sale’ if you have asked for it to be kept marketed, the Consumer Protection Regulations, the Advertising Standards Authority and The Property Ombudsman all forbid this in this instance.”
“Why? CPRs make it clear that a property’s status must not be misleading; it also states that anything that may affect a consumers decision to buy must be communicated at the earliest possible opportunity. As such, to describe a property as ‘for sale’ when there is a sale proceeding on it may well be regarded as a misleading status and, thus, a breach of the regulations.”
This is precisely the same issue which landed Markco Media in hot water with the OFT back in 2010. The Office received an agreement from Markco and its director that there would be no repeat and the investigation was closed.
But its implications for agents today are clear and come hot on the heels of The Property Ombudsman’s annual report 10 days ago which suggested many agents were still unaware of the detailed implications of CPRs, and in some case believed the now-defunct Property Misdescriptions Act was still the key piece of legislation applicable to house sales.
As Chris Wood told EAT over the weekend: “The public and agents alike need to be aware of this. There are a great many agents who could unwittingly be breaking the law."
· Estate Agent
· CPRs
· OFT
· PDQ Property
· Chris Wood Reported by Estate Agent Today 1 hour ago.
Back in the summer of 2010 Markco Media advertised online that it would be selling a limited number of Apple iPhone 4 handsets for £99 - the normal retail price being £499 - at a specific date and time. To be eligible to purchase the handset, consumers had to subscribe to the Groupola website and sign up to receive daily email alerts from Groupola.
As a result, 14,561 consumers subscribed to be eligible for the sale. According to a press release issued by Markco Media at the time, over 'five million' users attempted to visit the website within the sale period.
During the sale an online ‘progress bar’ indicated there were over half the amount of iPhone 4s still available; above this was a caption stating '202 bought'. Soon after the promotion in question concluded Markco Media stated that “We can confirm that we had 200 handsets available, and these have now sold out.”
Subsequent questioning from the OFT discovered that Markco had, in fact, only eight iPhones available at the discounted price. The OFT ruled that Markco Media may have been operating in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).
In a lengthy and detailed ruling, discovered by former Zoopla journalist Nigel Lewis, a key sentence which will be of concern to estate agents reads:
“As a result, this caused or was likely to cause the average consumer to take a transactional decision that would not have been taken otherwise constituted unfair commercial practices, contrary to Regulation 3 (4) (d) under the provisions of paragraph 5 of Schedule 1 of the CPRs”.
The OFT's successor body, the Competition and Markets Authority, has confirmed the regulation now also applies to estate agents.
The ever-diligent Chris Wood of Cornish agency PDQ Property raised a similar question four months ago when he blogged under the title “Why can’t I keep my home marked as ‘For Sale’?”.
His blog - examining why a seller may think an agent was being negligent in advertising a home as ‘under offer’ or ‘STC’ instead of ‘For Sale’ when the vendor has requested it still to be marketed - points out that the agent is merely abiding by the law.
“Whilst it seems entirely logical to mark a property as ‘for sale’ if you have asked for it to be kept marketed, the Consumer Protection Regulations, the Advertising Standards Authority and The Property Ombudsman all forbid this in this instance.”
“Why? CPRs make it clear that a property’s status must not be misleading; it also states that anything that may affect a consumers decision to buy must be communicated at the earliest possible opportunity. As such, to describe a property as ‘for sale’ when there is a sale proceeding on it may well be regarded as a misleading status and, thus, a breach of the regulations.”
This is precisely the same issue which landed Markco Media in hot water with the OFT back in 2010. The Office received an agreement from Markco and its director that there would be no repeat and the investigation was closed.
But its implications for agents today are clear and come hot on the heels of The Property Ombudsman’s annual report 10 days ago which suggested many agents were still unaware of the detailed implications of CPRs, and in some case believed the now-defunct Property Misdescriptions Act was still the key piece of legislation applicable to house sales.
As Chris Wood told EAT over the weekend: “The public and agents alike need to be aware of this. There are a great many agents who could unwittingly be breaking the law."
· Estate Agent
· CPRs
· OFT
· PDQ Property
· Chris Wood Reported by Estate Agent Today 1 hour ago.