Purplebricks pledges to appeal latest ban on advertisement

Another Purplebricks ad has been stamped down on by the Advertising Standards Authority following a complaint by Hunters Property Group - but the hybrid agency says it will appeal the ruling.

Once again the cause of the controversy surrounds Purplebricks’ statements about its charges.

Specifically, Hunters challenged three elements of an advertisement on Purplebricks’ own website.

The first was a claim stating: “Instruct us to sell for £849”; the second concerned savings claimed in a comparison infographic used in the same display; and finally, Hunters challenged whether the ad was misleading because the comparison included in the infographic did not make clear that the £849 fee - unlike traditional estate agent commission - had to be paid irrespective of whether or not the property was sold and before the sale was completed.

Purplebricks has issued its own statement following the ASA ruling, saying it is “extremely disappointed” and calling it “unprecedented and unfair” because - the agency claims - an agreement over the issue had been made with the authority, only for Hunters to appeal the deal. Now Purplebricks pledges to appeal the ASA’s decision 

The complete wording of the ASA ruling and Purplebricks’ statement can be found later in this story.

As EAT readers will recall, there have been various rulings made in the past by the ASA regarding Purplebricks’ advertising. 

Arguably the most high profile was the banning of two ‘commisery’ TV adverts in their original form after the ASA ruled they did not make it sufficiently clear that sellers pay a fee whether their property sells or not. That complaint had been filed by the now-defunct Charter for Independent Estate and Lettings Agencies.

The authority said at the time - last October - that such information would have been relevant in helping consumers make an informed decision about whether to instruct the hybrid agency. 

Because of the continuing interest in Purplebricks’ clashes with the Advertising Standards Authority, we are reproducing the entire ruling below:

Summary of Council decision:

Three issues were investigated, all of which were Upheld.

Ad description

A website for the online estate agent Purplebricks, seen in October 2017, included text on the home page which stated "Instruct us to sell for £849". Small text below stated "£1,199 in London and surrounding areas". 

Next to that text was an icon which, when hovered over, revealed text which stated "If you choose to take advantage of our viewings service; which covers all viewings, there is a one off fee of £300". Additional text on the home page stated "How much could you save?", "Your Saving" and "Our standard fee £849" next to an infographic that let the consumer input information about the selling price and the estate agent's commission. 

Next to the text "Our standard fee £849" was an icon which, when hovered over, revealed text which stated "This is our standard fee for everywhere outside of London and surrounding areas, where we charge £1199 inc VAT. Around 40% of our customers pay us a fixed fee of £300 to cover ALL viewings".

Issue

Hunters Property Group, who understood that the average fee paid to Purplebricks was higher than £849 challenged whether the following claims were misleading and could be substantiated:

1. “Instruct us to sell for £849”; and

2. the savings claims generated by the comparison infographic.

3. Hunters Property Group also challenged whether the ad was misleading because the comparison included in the infographic did not make clear that the £849 fee, unlike estate agent commission, had to be paid irrespective of whether or not the property was sold and before the sale was completed.

Response

Purplebricks Group plc said they were a disruptive force in the estate agency market. They said since they started in 2014, the average estate agency commission that had been charged by traditional agencies had fallen from an average of 2.14% to 1.5%, partly in response to their much lower fees. 

They also said they were the first estate agency to have revealed their fees transparently on their website. They had also recently commissioned a third party to undertake research amongst over 1000 estate agency offices to see how many of them had revealed their fees on their websites; they found 7% did, meaning that 93% do not.

Purplebricks said £849 was the figure that most people paid to sell their property. They said people in London and surrounding areas paid £1199. Further, around 40% of people paid an optional £300 for their viewings service; that covered all viewings for a single, transparent fee.

Purplebricks said it was clear from the calculator that people should have put their own figures in. They said they gave people the option to choose their standard fee or the London and surrounding area fee. They said they specifically called out the additional viewings cost. When the ad was complained about this was with an icon showing extra information but was now clearly displayed in text below the infographic. 

Whilst they used the average estate agents fee of 1.5% as a default, people had the option to change that depending on the real figure that they have been quoted. They understood the 1.5% substantiation had been provided to the ASA and Clearcast previously. They also said that the calculation was a figure consumers 'could save' as it was designed to be indicative rather than definitive.

3. Purplebricks said they made it explicit in the section entitled 'What's included in our fee' when the fee was payable. They also said they included this information in their FAQs. They said they continued to market a property, without any further charges, until it was sold. They said that following on from discussions with the ASA they had added further information, wherever their fee was displayed, via an asterisk which prompted consumers to seek further clarification on the optional charges and that the fee was always payable.

Assessment

1. Upheld - The ASA considered consumers would understand the claim “Instruct us to sell for £849” and the additional text “£1,199 in London and surrounding areas” to mean that those were the total prices they would pay for the provision of Purplebricks’ services.

We understood it was standard practice for traditional estate agencies to conduct viewings on behalf of property sellers as part of their fee. We considered, in the absence of information to the contrary, that consumers would assume that Purplebricks’ service was the same. However, we understood that Purplebricks did not provide a viewings service as part of their fee and charged an additional £300 if sellers wanted an agent to conduct viewings on their behalf.

We understood that 40% of customers who used Purplebricks’ service paid that additional £300 for the viewing service. We considered that for those customers in particular, but also for other customers considering using the service, the existence of the fee was likely to be material information that was likely to influence their decision to inquire further or take up the service.

We noted a further qualification appeared in a hover over icon which stated “If you choose to take advantage of our viewings service; which covers all viewings, there is a one off fee of £300”. However, we did not consider that providing that information only in a hover over box was sufficient to offset the headline price claim and should have been immediately clear to consumers when they saw the price.

Because the ad did not make clear that the viewings service had separate fee, payable in addition to the £849 and £1,119 prices, we considered the ad was likely to mislead.

On that point, the ad breached CAP Code rule  3.1  (Misleading Advertising),  3.9  and  3.10  (Qualifications).

2. Upheld - We noted that the comparison tool worked by consumers entering the proposed selling price of their property and the percentage commission they might be charged on that sale price by a traditional estate agent. They could then select whether that cost was to be compared with Purplebricks’ standard fee for properties in Greater London, or the fee for the rest of the UK. The difference was then presented as a claim about how much consumers could save.

As discussed above, because it was standard practice for traditional estate agencies to conduct viewings on behalf of property sellers as part of their fee, we considered that it needed to be made clear to consumers that Purplebricks charged an additional fee of £300 to conduct viewings.

However, we noted that the fee used as the basis of the calculation, whether for properties in London or outside it, was Purplebricks’ standard fee and did not include the additional £300 charge.

We noted that additional text at the very bottom of the web page stated “Around 40% of our customers pay us a fixed fee of £300 to cover ALL viewings” and that, as a result of initial interaction with the ASA, they had added text slightly below the comparison tool which stated “Viewings service is an optional £300”. While we welcomed that change, we did not consider that the text, in either instance, was sufficiently prominent to override the overall impression that the headline savings claim, generated by the tool, would be achieved by all consumers.

For that reason we considered that the comparison tool was likely to mislead consumers about the savings they might make when using Purplebricks.

On that point, the ad breached CAP Code rule  3.1  (Misleading Advertising),  3.33  (Comparisons with identifiable competitors) and  3.39  (Price comparisons)

3. Upheld - We understood that it was standard practice for traditional estate agencies to only levy their fee in the event of a successful sale and after that sale was complete. We therefore considered that, in the absence of information to the contrary, consumers were likely to assume that Purplebricks worked in the same way.

We understood there were various circumstances as to whether and when customers would pay, including: when a property was sold and the legal process was complete; if a customer withdrew instructions for Purplebricks to market a property; if a customer withdrew from Purplebricks’ Advanced Conveyancing service or ten months from the date when customers agreed to use Purplebricks’ services. We therefore considered that the ad should have made clear that the fee would always need to be paid, even if the property was not sold and potentially before any sale was complete. Because it did not do so, we concluded that it was misleading.

On that point, the ad breached CAP Code rule  3.1  and  3.3  (Misleading Advertising).

Action

The ad must not appear again in the form complained of. 

We told Purplebricks Group plc to ensure they made clear immediately and prominently that their viewings service had a separate fee, payable in addition to the £849 'standard' price, and that fees would always be payable whether or not a consumer's property was sold and potentially before a sale was complete. 

We also told them to ensure that, when comparing the price of their service with that of traditional agents they made sure that any savings claims were accurate for all consumers by, for example, giving consumers the option to include the cost of the additional viewing service when using the comparison tool.

In response to this ruling by the ASA, Purplebricks last evening issued this statement:

“We are extremely disappointed with this ruling change and the process adopted. The complaint, which came from a rival estate agency, was resolved four months ago in partnership with the ASA, made public by them and mutually agreed minor changes made to our website. 

“We were surprised when, only a day after reaching this agreed position and announcing it publicly, the same rival estate agent appealed this decision and their demands were met by the ASA. We believe this is unprecedented and unfair. We will appeal the ruling.

 “At Purplebricks we strive to ensure industry leading levels of transparency by offering customers certainty of what they will pay to sell their house before they go on the market and a choice around whether they pay for our viewings services or undertake the viewings themselves. 

"Our customers know their homes best and 60 per cent of them choose to show potential buyers around themselves and save some money. Those who are too busy, or who prefer to leave it to our experts, pay a one-off £300 viewing fee to cover unlimited viewings. Customer choice has been a clearly communicated mainstay of our proposition and will remain so in the future.”