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By | OUT-LAW.COM 30th May 2008 09:38

Dell rapped for £60 delivery charge on £200 laptop

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Dell has been criticised by the advertising watchdog for not making it clear enough that a laptop would incur a £60 delivery charge. The Advertising Standards Authority (ASA) said that the charge "added significantly" to the cost of the computer.

In a direct mail advert for Dell computers a £199 laptop computer was offered for sale, but one recipient said that that advert was misleading because of extra charges a buyer would have to pay.

Buyers were told they could either pay the delivery charge or a £57.58 collection charge, though Dell later said that the inclusion of a collection charge was an error and that it no longer charged for collection.

The ASA said that, error or not, the advert appeared to impose charges amounting to a significant proportion of the cost of the computer on buyers, and that buyers appeared to have no choice but to pay the charges.

"Although we acknowledged that details of the charge had been included in the mailing in error, we considered the mailing had nonetheless contained misleading information by implying that there was no option but to pay for either delivery or collection," said the ASA ruling. "We reminded Dell that non-optional charges imposed on all buyers should be included in the headline price."

Dell argued that it charged the same price for delivery for any system, ranging from the low-cost laptops advertised to systems costing thousands of pounds. The ASA rejected that argument.

"We considered that the cost of delivery should have been made more prominent in either the main body of the mailing or by a clear, direct link to the small-print. We concluded that the presentation of the mailing gave a misleading impression of the total cost customers would have to pay for the computer," it said.

The ASA raised its own objection to the advert, which was that it should have included the amount of VAT to be paid in the advert.

Dell said that the ad was targeted exclusively at business customers, that it sent the advert only to small business customers from its own customer lists and externally sourced lists. It said that business adverts did not usually include VAT.

The ASA accepted that it was an ad designed for businesses but said that VAT could only be excluded if all other applicable charges were prominently displayed.

"We reminded Dell that the CAP Code allowed marketing communications likely to be read mainly by businesses able to recover VAT to quote prices excluding VAT or other taxes and duties provided that prominence was given to the amount or rate of any additional costs," it said. "We considered that, because the mailing did not include prominent information about the VAT rate payable or the price inclusive of VAT, the mailing breached the Code."

A new law protecting consumers from unfair business practices came into force this week. The Unfair Trading Regulations order companies to avoid unfair practices. Clare Francis of Pinsent Masons, the law firm behind OUT-LAW.COM, said that if the ad had been directed at consumers it might have fallen foul of the new law.

"This is unlikely to have breached the Regulations as it was a business to business communication. The Regulations only apply in relation to consumers," she said. "If it had reached a consumer then it could potentially breach the Regulations on the grounds that it was a misleading action or a misleading omission."

"For the first of these it could be argued that the overall presentation of the mailing could deceive an average consumer, even if the information provided is factually correct, and cause that consumer to take a transactional decision that he or she would not otherwise have taken," said Francis. "For the second, the mailing would be misleading if it has hidden material information or provided it in a manner which is unclear or ambiguous and as a result caused the consumer to take a transactional decision that he or she would not otherwise have taken."

Copyright © 2008, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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