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Monday, 20 October 2014

Driving Lessons 10@£99 Are the Terms and Conditions Fair?

In my previous blog - Bending Space & Time - I had a bee-in-my-bonnet about the standard of advertising in the driver training industry and gave an example of an advert where just one word made all the difference between it being completely honest and truthful or misleading. Having bought this to the attention of the advertiser, they did the decent thing and took action by removing the misleading word 'beginner' from the following campaign, which had a dramatic effect, as the number of people purchasing the lesson vouchers dropped from 220 sold to 77 and it would appear that the previous consumers may well have made a different transactional decision had it not included the word “beginner”.

The example I used is not the only business in the driver training industry using the cheap voucher offer scheme and in addition, it is becoming increasing common to see driving schools using introductory offers at bargain basement level prices, for example; 10@£99 (10 hours for £99.00 compared to the average price of £23-£25 per hour) - I'll explore the fairness of the terms and conditions later in this blog.

Misleading context
What if an advert said “buy six get four free” would that be fair?
Not necessarily and especially if it’s not made clear to the customer that they are obliged to purchase more than the six they've paid for in order to remain eligible for the four “free” lessons.

In the knowledge that I would be writing an article on this topic I contacted Nottinghamshire Trading Standards for advice and they provided a copy of the guide TSBI 43. According to this guide “Describing a product as 'free', 'gratis’, ‘without charge' or similar if a consumer is going to have to pay more than the cost of responding to the advertisement and collecting or paying for delivery of the item” is a breach of the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs).”

What are the CPRs and what do the Regulations cover?
The CPRs cover commercial practices between traders and consumers. These are defined as "acts, omissions, course of conduct, representation or commercial communication (including advertising and marketing) by a trader, which is directly connected with the promotion, sale or supply of a product to or from consumers, whether occurring before, during or after a commercial transaction (if any) in relation to a product".  A product is any goods, or service, and includes rights and obligations.

Do you know these rules?
Much of the driver training industry relies on the trust shown by their clients and this trust is hard to establish but very easy to erode, so my guess is that the majority of us cannot afford to allow non-compliance. Without a thorough knowledge of these regulations you may easily ignore these rules and may well be unwittingly leaving both you and your business open to prosecution.

What are the consequences of non-compliance?
Enforcers may take civil enforcement action in respect of a breach of the CPRs under Part 8 of the Enterprise Act 2002. This can be done by applying to a court for an enforcement order and a breach of any order could lead to up to two years imprisonment and/or an unlimited fine. The CPRs also contain criminal offences, which can be prosecuted by the Office of Fair Trading (OFT) or Trading Standards. The penalties are:
· On summary conviction, a fine not exceeding the statutory maximum (currently £5000).
· On conviction on indictment, an unlimited fine or imprisonment for up to two years, or both.
What is prohibited?
Effectively the CPRs prohibit trading practices which are unfair to consumers. There are four different types of practices to consider:
1. 31 specific practices which are always considered to be unfair. (Listed in the guide TSBI 43)
2. Misleading actions and omissions.
3. Aggressive practices.
4. A general duty not to trade unfairly.
For practice types two to four it is necessary to show that the action of the trader has an effect (or is likely to have an effect) on the actions of the consumer. There does not have to be a physical consumer, as this is a test looking at how the average consumer is, or is likely, to be affected. The CPRs identify three different types of consumer - the average consumer, the 'targeted consumer' and the vulnerable consumer - recognising that different types of consumers may react to a practice in different ways.
A full version of the CPR 2008 can be downloaded from this link https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284442/oft1008.pdf

Playing Fair
Lets revisit the first four words of my previous blog - Legal, decent, honest and truthful. These are the benchmark values for all advertising and are included at the foot of each communication from ASA, including the one they sent to me when kindly providing the following statement for my article.

The Advertising Standards Authority is responsible for ensuring the content of UK ads stick to the rules. One of the key rules is that ads shouldn't mislead.  Misleading ads are not only unfair to consumers; theyre also unfair to those businesses that play by the rules.
The Advertising Codes apply across media, including online.  We are aware of concerns around ads for driving schools, and whether theyre being upfront and clear about the services they offer.
In particular we've received complaints that ads for driving school services have misled because they have:
·         Exaggerated pass rates or claimed guaranteed passes
·         Not provided clear pricing structures
·         Failed to ensure testimonials are always genuine
·         Made market leader claims without holding suitable evidence
The ASA has previously taken a dim view of marketers claiming to guarantee results.  Furthermore, advertisers should ideally hold evidence to back up their claims.  If anyone has any concerns that an ad for a driving school is misleading and not upfront and clear with consumers, or that it denigrates a competitor then we encourage them to get in touch with us.
We take these concerns seriously and can and will take action to stop misleading claims from appearing.
Visit www.asa.org.uk for further information, or to raise a complaint.

Put to the test
When advertising a deal is it essential to consider the CPRs, which say “it is a breach of the regulations to omit material information; to hide material information; to provide material information in a manner which is unclear, unintelligible (take note Voucher Scheme), ambiguous or untimely”

Armed with this knowledge and ASA’s advice I carried out a quick internet search and soon came across numerous deals/offers for 10@£99 – except a customer can’t buy just 10@£99 as without exception, the examples that I reviewed imposed various restrictions to the number of beginner lessons with the remaining “free” lessons being held back until more are purchased. This in itself is not the issue and some terms and conditions were very thorough, however I suspect not all of these terms and conditions have been checked for compliance with regulation and one particular example penalised the consumer by withholding ANY refund if the prerequisite number of lessons weren't taken.

Unfair Terms and Conditions
In an attempt to protect their interests a driving school may consider introducing a number of terms and conditions, but in doing so they may also inadvertently create unfair terms within that contract. Therefore it is vitally important to be conversant with and consider the regulations covered in the Office of Fair Trading downloadable guide (OFT311) Unfair Contract Terms Guidance - Guidance for the Unfair Terms in Consumer Contracts Regulations 1999.
Take for example; Group 4: Retention of prepayments on consumer cancellation –paragraph 1(d) of Schedule 2.
This states; those terms may be unfair if they have the object or effect of: (d) Permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract.

I don't use contracts - or do I?
Perhaps the simplest forms of contract we have in our industry are those used for lesson bookings, whereby much of the industry has a set number of hours required for cancellation without incurring a fee. An instructor may charge if the customer cancels within that set number of hours, but often ignore the requirement to have a reciprocal clause compensating the customer if the instructor was to cancel at short notice. If there's no reciprocal clause the contract may be in breach of the regulations.

Guaranteed Pass - there's only one way to do this and it's not legal

Continuing my online search I also came across a school with the headline offering a GUARANTEED PASS which upon further inspection wasn't actually guaranteeing a pass at all, instead it guaranteed free training if the customer failed three attempts at the driving test.  There were numerous statements such as “XYZ are the fastest growing driving school or ABC is the UKs largest and London's Premier school or XYZ has an exceptionally high first time pass rate

The Advertising Code clearly states; before distributing or submitting a marketing communication for publication, marketers must hold documentary evidence to prove claims that consumers are likely to regard as objective and that are capable of objective substantiation. The ASA may regard claims as misleading in the absence of adequate substantiation.

It would be interesting to see, if challenged, whether any of the aforementioned advertised claims are capable of objective substantiation. Take this example of a genuine advert that I think pretty much sums how not to comply.

“XXX is one of the fastest growing independent driving school in East London. We are only one of few driving schools to use DSA certified instructors only. Our lessons are premium quality and our PASS RATE is just AMAZING. Book your lessons with London's premier driving school and give yourself the chance to pass FIRST TIME [sic]

Let’s look at the content of this advert.
Ironically in the first statement the advertiser asks, “Who are you going to trust with your lessons?” It would be interesting to ask a psychologist what conclusions they might draw from this opening statement.

Fastest growing - not capable of objective substantiation unless they have evidence of their competitor's growth rate
We are only one of few driving schools to use DSA certified instructors only - Honest? Truthful? You decide.
Our lessons are premium quality and our PASS RATE is just AMAZING - not measurable or substantiated by documentary evidence
Book your lessons with London's premier driving school -  that's a big statement and one not capable of objective substantiation

The driver training industry is striving to be recognised for its professionalism, we are changing the way in which we teach, but we also need to review the way in which we run our businesses. Therefore my motivation for writing about these issues is to hopefully raise awareness and prompt some inward thinking and reflection. I've touched upon just some of the regulations, but hopefully you've gathered by now that there are a raft of measures set in place for consumer protection, many of which you may or may not be familiar with and you may or may not already be using to ensure compliance. Our industry and the services we provide are in no way any different to any other, we haven’t got, and shouldn't have any special dispensation and most importantly we are all open to prosecution should we fail to comply.
In addition, due to the nature of our relationship with our customers and reliance on recommendation, in some ways we need to be more credible and I strongly believe that a firm foundation for credibility is to hold true to those four values - Legal, decent, honest and truthful and so I’ll leave you with this final thought.

Would your marketing stand the test if challenged? 

Driver Instruct Partnership provide driver training business support and advice plus much more for its members. Go to www.driverinstruct.co.uk for more details on how to join the "John Lewis Partnership" of the driver training industry, where the business is owned by its members.
©Stu Walker 2014

Friday, 17 October 2014

Bending Space and Time - or the Truth?

Legal, decent, honest and truthful

These four words form a key part of the intrinsic values of every Approved Driving Instructor (ADI) – don’t they?

For some time now I’ve had a bee-in-my-bonnet about the standard of advertising within the driver training industry, including both the intended and unintended messages these communicate.
I realise that for many ADIs this is the first time they have been self-employed, becoming not only a training deliverer but also, amongst many things, their own website designer, copy & proof reader, and marketing manager. However, websites and social media content generally goes unchecked and a lot of the transgressions are unintentional, but I guess even when giving them the benefit of the doubt, is ignorance really a valid defence for a responsible business owner?

Some businesses should know better
I recently received an email from one of the voucher scheme providers and one headline caught my interest
Get 4 beginners driving lessons - £12
After the usual round of eye-rolling and tutting I looked past the headline and clicked on the “fine print” which told me that the "Deal consists of 2 hours worth of driving lessons at the start and 2 hours before the driving test."
This revelation got me wondering what I’ve been doing wrong all these years –I’ve been doing pre-test preparation lessons two hours prior to the test and tend to get the beginner lessons out of the way quite early on when the pupil is...huh erm.... a beginner (Seemed more client-centred to me).

Now taking into account the fine print this particular headline appeared to be a little misleading, so I followed the advice of the Advertising Standards Authority (ASA) and sent the following business-to-business email politely requesting a change to the wording.

Dear Voucher Scheme Provider,
I would like to bring to your attention the misleading nature of a current advert you have running for XYZ Driving School. This advert clearly states:  "Get 4 beginners' driving lessons"
However; the terms and conditions restrict this to two beginner lessons.
Quote: "Deal consists of 2 hours worth of driving lessons at the start and 2 hours before the driving test". This means the customer cannot take four beginner lessons and [the advert] is therefore misleading and should either be removed or reworded.

Very shortly after I received the following reply from Voucher Scheme

Thank you for your E mail.
Any customer purchasing the deal with the merchant XYZ will get two 2 hour free lessons at the start when you begin learning. Any lessons the instructor feels the customer needs leading up to the driving test the customer will pay the merchant XYZ for. Before you take your driving test the 2 lessons all customers will have before their test will be free of charge. This equates to 4 lessons in total each at one hour in length.” 

For us mere mortals who couldn’t follow that logic, here’s a summary;
Two x 2 hours + 2 hours = 4 (1 hour lessons) and these are free
Where did the £12 go?  And how does 2 x 2 + 2 = 4? And how does a two hour lesson become a one hour lesson?

Time Travel
This made me wonder how I managed to miss the ADI training classes on how to bend the space and time continuum....
...and then it struck me, I realised just how it is they can deliver beginner lessons just before the test and only charge an equivalent £3 per hour – they must have a time-machine taking them back to the beginner lessons and then at the end of each day it takes the instructor back to the 1970’s when the cost-of-living was lower.

If they haven’t invented time travel then I suggest this particular advert isn’t accurately representing the service being offered and so I made it clear to Voucher Scheme Provider that if they continued the campaign with its current wording then I would have to formally complain to ASA. This did the trick and Voucher Scheme Provider sent another email informing me that the wording had been changed, although by this time the campaign had ended with over 220 vouchers sold.

Now you might be thinking so what? What’s this got to do with me anyway? Well, as a consumer and business owner it’s all about a sense of fairness and no doubt at some point we’ve all questioned the validity of an advertisement’s content, so why wouldn’t I challenge those in my industry which directly affect my business?

Buyers Remorse
Here’s the problem. Those 220 customers are now 220 fewer customers for all those businesses who follow the rules and play fair. Also, those new customers may regret not having read the fine print when they eventually find out that their expectations are not met and consequently a distrust of the industry as a whole grows. I recently took a call from a potential client who'd bought a voucher and spent the entire duration of the lesson driving around a car park because the instructor didn't know the area.

Over the next few weeks I continued to look out for further advertising by this company and sure enough around a month later a similar email was received. This time though, the wording had indeed changed and the beginner lessons simply became lessons. The effect was dramatic, as this time around the number of people purchasing the voucher dropped from 220 to 77. So, it appears that a large number of consumers were possibly misled by the wording of the previous advert and may well have made a different transactional decision had it not included the word “beginner”.

Many ADIs work independently and are unaware of the rules and regulations. Without an awareness of the advertising codes ADIs are likely to fall foul of the rules and leave their businesses open to all manner of issues. Driver Instruct Partnership provide business support and advice to help it's members meet the legal requirements. 

You can find out more on our website www.driverinstruct.co.uk

©Stu Walker 2014