Because of the interest in this judgement, we are publishing the ASA decision in full later in this story.
In summary, the CIELA complaints challenged whether the comparison in both ads between Purplebricks’ upfront fee and the commission charged by other estate agents was misleading.
The ASA came down in favour of the complainant, saying that “it was not sufficiently clear in the ads that the fee payable to Purplebricks was not conditional on the sale of the property”.
The authority went on to say that because of the infrequency with which people move house, they may have been unfamiliar with the concept of the upfront fee and paying a flat charge whether or not the property went on to be sold.
It therefore went on to find that the advertisements were misleading in that regard.
The ASA concludes in its judgement: “The ads must not be broadcast again in their current form. We told Purplebricks to ensure that when making a comparison to other fee models in their ads, they made it clear that their flat fee was always payable.”
Purplebricks Group chief executive Michael Bruce, responding to the judgement, issued a statement last night saying: “We are surprised by the ASA judgement on the flat fee wording because prior to air our adverts went through the proper approvals process, including the official clearance body Clearcast who have continued to support their original judgement with the ASA.
“Purplebricks is firmly on the side of the consumer, offering an alternative to the commission based model. As a leader of industry change some noise is inevitable.
“Purplebricks is committed to increasing levels of transparency within the industry, publishing its fixed fee rates on the home page of its website so all consumers from the outset have certainty as to the cost of selling. Purplebricks is far more transparent than traditional estate agents who do not typically publish their rates, allowing them to charge much greater and varying fees dependent upon a customer’s ability or capacity to negotiate.”
A lengthy statement from Charlie Wright, the industry software entrepreneur behind the complaint and the person who tried to set up CIELA, said the “entire estate agency industry of firms large and small have experienced the worst downward pressure on fees in decades as a result of the perception of what selling fees should be.”
He added that every conventional estate agency “from Countrywide and Foxtons down to the thousands of local one-man-band independent agents across the country” have suffered as a result.
Because of the high level of interest in the issue, here is the ASA verdict in full, below:
Summary of Council decision
Two issues were investigated, of which one was Not upheld and one was Upheld.
Two TV ads for the online estate agent Purplebricks, seen in March 2017:
a. The first TV ad featured a younger and an older couple discussing the sale of a house. The younger woman said, “We sold the house”, to which the older man replied, “That’s great. Simon did you sell with Purplebricks?” Simon asked, “They are just online aren’t they?” The older man answered, “No, no, they are proper estate agents, you just don’t pay commission.” Simon said, “No commission. Oh. One minute, please.” He then got up from his seat and placed his head in a cupboard and screamed loudly. The voice-over stated, “Ah, commisery [sic]: the misery you feel when you spent thousands on commission but got nothing more for your money. Save yourself from commisery [sic] at purplebricks.com.” On-screen text displayed during the ad stated “Viewing service costs extra. Saving based on Purplebricks flat fee vs using a High street estate agent …”.
b. The second TV ad was set in a kitchen with two women sat a table. The first woman asked, “So you must be happy you’ve sold the house?” The second woman replied, “Yeah, it’s exciting.” The first woman asked, “Did you use Purplebricks?”, to which the second woman responded “Aren’t they just online?” The first woman answered, “No, they’re proper estate agents, they’re real people. They just don’t charge commission.” The second woman replied, “Sorry, what?”, and the first woman responded “Just, no commission.” The first woman said “Right”, and dropped her face into a cake which was on the table in front of her. The voice-over stated, “Ah, commisery [sic]: the misery you feel when you spent thousands on commission but got nothing more for your money.” The second woman looked at the first woman and said, “That’s good to know isn’t it?”, and the second woman responded “Yeah.” The voice-over stated, “Save yourself from commisery [sic] at purplebricks.com”. On-screen text displayed during the ad stated “Viewing service costs extra. Saving based on Purplebricks flat fee vs using a High street estate agent …”
The ASA received 38 complaints:
1. 37 complainants, including Oakhill Estate Agents, challenged whether ads (a) and (b) misleadingly implied that Purplebricks did not charge a fee for their service.
2. The Charter for Independent Estate and Letting Agents (CIELA), who understood that Purplebricks charged a fee whether a property was sold or not, challenged whether the comparison in ads (a) and (b) between Purplebricks’ fee and the commission charged by other estate agents was misleading.
1. & 2. Purplebricks said that the message behind the ads was that they did not charge a commission but instead charged a flat fee. They believed that consumers were aware of the difference in definition between commission and flat fee and would therefore understand from the ads that Purplebricks charged a flat-fee and that the service was therefore not free. They said that the ad simply highlighted that they used a non-traditional charging model. Further, they said that this was also made clear by the on-screen qualification which included the words “Saving based on Purplebricks’ flat fee”.
They said that the comparison between the two fee models was not misleading because the products offered by Purplebricks and high street agents were the same and that price was the objective basis of the comparison. Further, they felt that the crucial comparison for consumers was solely that of the difference in price. They drew an analogy that when consumers compared flights, they were concerned only with price. The differences in airline cancellation policies, however, did not make the comparison misleading. They said that they considered consumers understood that a flat-fee was payable for their services even if the property was not sold given the natural meaning of the term. They also stated that flat-fee model estate agents had a high profile in the media and that consumers were aware of the fundamental differences in fee structures and how the ‘flat-fee’ structure was applied to estate agency services.
Clearcast said Purplebricks confirmed to them that no commission was paid for its service and they only charged a flat fee, which was included in the on-screen qualification. They also said that Purplebricks were selling their advantage based on the savings that could be made when a property was sold with them versus the cost of an estate agent fee. That was substantiated to Clearcast with a comparison of costs and details of the services offered by Purplebricks. Further, they said that they believed that consumers would be aware that when the word ‘flat’ appeared in front of the word ‘fee’ that the service involved a fixed payment regardless of sale and the advertiser’s use of the fee model was further emphasised in the on-screen text.
The ASA considered that the average consumer would understand from the dialogue which stated “They are proper estate agents” and the ads overall, that the service offered by Purplebricks was akin to high street estate agents. We considered that the average consumer to whom the ad was directed was likely to be a homeowner and would therefore be more likely to be familiar with the house selling process and would expect estate agents to charge for their services. That was further emphasised by the reference to a fee in the on-screen qualification.
On that basis, we considered that consumers would understand that Purplebricks was a commercial business and would charge for their services. We therefore concluded that the ad was unlikely to mislead them into thinking that there would be no fee.
On that point, we investigated ads (a) and (b) under BCAP Code rules 3.1 (Misleading advertising) and 3.10 (Qualification), but did not find it in breach.
The ASA considered that the average consumer would understand from the ad that Purplebricks offered a different charging model to high street estate agents and based on the dialogue in the ad, “… you just don’t pay commission” that it was not commission based. As with point one, we considered from the overall ad, including the on-screen qualification, consumers would understand that Purplebricks charged a flat fee. However, we considered that they would likely understand that a fee was payable but not that the fee was always required to be paid upon commissioning Purplebricks services, even when a property had not been sold. We considered the fact that the fee was always payable was material information that would allow consumers to make an informed decision about using Purplebricks services.
We acknowledged Purplebricks intended to highlight that they did not charge a commission but instead charged a flat fee. However, we considered that flat-fee payments were relatively new in the housing market. Further we considered because of how infrequently consumers sold their properties, the average consumer was likely to be more familiar with the traditional commission-based model. We considered that it was not sufficiently clear in the ads that the fee payable to Purplebricks was not conditional on the sale of the property and therefore concluded that the ad was misleading.
On that point, ads (a) and (b) breached BCAP Code rules 3.1 3.2 (Misleading advertising) and 3.33 (Comparisons with identifiable competitors).
The ads must not be broadcast again in their current form. We told Purplebricks to ensure that when making a comparison to other fee models in their ads, they made it clear that their flat fee was always payable.