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Purplebricks: Independent agents release text of complaint letter

The fledgling Charter for Independent Estate and Letting Agents has released to the media the text of a complaint letter it has sent to hybrid agency Purplebricks.

The 850-word complaint covers seven topics, alleges that Purplebricks’ ads are misleading to consumers and in violation of the UK Code of Broadcast Advertising and the Consumer Protection from Unfair Trading Regulations.

However, it admits that the advertisements “are not factually inaccurate”.

The complaint letter - reproduced in full below - is the latest in a war of words waged by the new CIELA group on Purplebricks. 

In recent weeks CIELA has said it may complain on similar grounds to the Advertising Standards Authority and has also tweeted its concern about the treatment of a negative review of Purplebricks on Trustpilot - while Purplebricks itself has made clear that it has some thousands of positive reviews on that website.

Meanwhile Purplebricks itself has so far remained relatively tight-lipped on the CIELA attacks. A spokesperson told Estate Agent Today: "We don't propose to comment on CIELA's press release."

The text of the complaint letter is as follows:

Dear Sirs, CIELA alleges that Purplebricks advertisements are misleading to consumers, thereby in violation of portions of the UK Code of Broadcast Advertising, and the Consumer Protection from Unfair Trading Regulations. 

While the statements made in Purplebricks advertisements are not factually inaccurate, they serve to mislead the reasonable, average consumer. The public perceives “agents” as individuals who sell homes and retain a commission upon a successful sale. Purplebricks flat fee is not comparable to that of a commission, and its savings claims are based on material assumptions that are omitted from the advertising materials. 

I. Misleading Nature of the Improper Price/Savings Comparison: 

A. Omission of risk of loss associated with flat fee: The Purplebricks flat fee guarantees that a home will be listed to sell or to let. It is non-refundable, regardless of whether it is up-front or paid later. Conventional agents charge a commission only upon a successful sale. To compare the two in televisionadvertisements, and on the Purplebricks website, is irresponsible and misleading. 

B. Absolute Number Average Monies: Purplebricks’s website champions an average savings of £6,267 for London and surrounding area sales, and £3,035 across the UK. In miniscule print, it explains these figures are based on a commission of 1.8% charged by non-online agents. CIELA demands substantiation of this percentage. 

Omission of material assumption that final sale or letting price achieved would be the same, regardless of agent: Purplebricks omits a material assumption upon which its claim of savings depends. It does this in multiple locations on its website, and within its television commercials. The Purplebricks equation only functions if the hypothetical comparison agent would final sales or letting price. CIELA strongly contends that this is not substantiated, and that the omission of that material assumption itself is misleading. 

II. Applicable Regulations: 

Consumer Protection from Unfair Trading Regulations 2008 defines a commercial practice as misleading if it “causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.” 

Part 2 § 5(1) (b). Part 2 Section (5) (2) (a) of the Regulations dictates that even if a practice contains factually accurate information, it is misleading if “its overall presentation in any way deceives or is likely to deceive the average consumer.” 

UK Code of Broadcasting Advertising 

Rule 3.2: Advertisements must not mislead consumers by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner. Material information is information that consumers need in context to make informed decisions about whether or how to buy a product or service. Whether the omission or presentation of material information is likely to mislead consumers depends on the context, the medium and, if the medium of the advertisement is constrained by time or space, the measures that the advertiser takes to make that information available to consumers by other means. 

Rule 3.9: Broadcasters must hold documentary evidence to prove claims that the audience is likely to regard as objective and that are capable of objective substantiation. 

Rule 3.33: Advertisements that include a comparison with an identifiable competitor must not mislead, or be likely to mislead, consumers about either the advertised product or service or the competing product or service. 

Rule 3.39: Advertisements that include a price comparison must make the basis of the comparison clear. 

III Injury: 

The misleading advertisements jeopardise the UK estate and letting industry’s reputation, as they promote distrust and dissatisfaction with the market, and they unfairly disadvantage independent estate and letting agents based on faulty and irresponsible price comparisons. 

The advertisements harm vulnerable consumer homeowners, who are not fully aware of the risks they take on when entering into a contract with Purplebricks. A reasonable, average consumer equates payment to an estate agent with the obligation to sell or let their home, and Purplebricks’ false comparison to non-online agents perpetrates this faulty reliance. Further, failing to present consumers with the proper context of Purplebricks’ savings claim removes from them the ability to make an informed decision. It is undeniable that such a decision is one of the most important financial decisions that a homeowner will make. 

IV Requests

Television Advertisements 

1. Remove existing advertisements from all remaining sites;

2. Refrain from comparing the guaranteed service that Purplebricks provides for its
non-refundable fee to the service provided by non-online agents, who charge
contingent-upon-successful-sale commissions; and

3. In future advertisements, communicate that the fee is non-refundable, even in light of an unsuccessful attempt to sell or let.

Purplebricks Website 

4. Do not label the fee a “selling fee,” because it merely guarantees a listing, so label it as such;

5. Alternatively, communicate that the fee is non-refundable, or, not contingent on a successful sale;

6. Substantiate the 1.8% commission fee upon which the purported savings claim depends; and

7. Explain that the savings claim necessarily assumes that a non-online agent would in a final sale amount than a Purplebricks agent. 

We look forward to your prompt response on this important matter. We look forward to improving the industry together, and providing improved and transparent service to vendor-customers. Because CIELA considers this a high priority, be advised that we will submit a complaint to the Advertising Standards Authority in the event that we are not satisfied that you are taking reasonable steps to correct instances of misleading representations on your website and television advertisements.

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    Seriously? Whilst business associations, or whatever Ceila is, are a good thing, why would any independent agent want to align itself with membership of such an organisation if they are so overtly aggressive. Some of the language used in their "press release" beggars belief! Furthermore, they should be helping their "members" to up their game in the face of new business models, rather than concentrating on attempting to kick the competition.

  • Jason Roberts

    CIELA says in their letter... "The misleading advertisements jeopardise the UK estate and letting industry’s reputation, as they promote distrust..."????
    A Third of the adult population in the UK don't trust estate agents (Source: Statista 2015 - Research carried out well before the PurpleBricks ads started to air).

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    2/3 do.

     
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    Well i would for one - if PB can get away with such advertising why cant i advertise that we get better prices than online agents (which we can)?

  • Martin Williams

    sir ... sir it's not fair sir, sir purple is cheating sir ...

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    To be fair i have been critical of Ceila - Personally i think its a revenue raiser.

    BUT

    Well done taking the fight on with PB, In my opinion they are deceiving the public in many ways, costs, service, coverage.

    Not yet convinced this bunch are for real but a good start ........

    Mark Scobey

    CIELA has nothing to do with standing up for the independence and everything to do with revenue generation.

    The annualised cost for joining CIELA is £420. (ARLA/NAEA is £260). Total market size is around 38,000 in terms of independent estate agents who are registered directors at Companies House. If CIELA was ti reach NAEA membership numbers, is annual revenue would be £4,410,000.

    An estimate of Easymatch’s revenue is around the £300,000 mark and declining. CIELA is an opportunity to replace Easymatch’s revenue.

    CIELA only needs 714 members to replace its existing revenue or 1.87% of the 38,000 total market.

    I’ve written quite an extensive piece on the whole CIELA premise that I’ll be publishing soon…

     
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    • 02 March 2017 10:45 AM

    So why don't they take on Countrywide with there sell your house for £995 and claiming that they are the first high street agent to offer online access too. They are not! Many agents in this market up north are offering online access only and providing vendors numbers of any interested parties. How do they think the little independents survive. As regards false advertising claims, then vast majority of ASA complaints are about independents advertising, as the old saying goes people in glass houses. We also have an agent who claims he has sold over 300 houses in 12 months, in fact he has completed on 202 but with fall throughs and re-selling some of them, then the claim is over 300 clever or misleading?

  • Nigel Adams

    Purple Bricks present themselves as whiter than white but there is no doubt that their advertising is highly misleading. I'm convinced that they are massaging their poor reviews too as if you Google "bad reviews Purple Bricks" and read what consumers say you can tell that everything is not as they present it. The world of estate agency is certainly changing - we know as one of the first local online estate agents to advertise on Rightmove way back in 2005 - but that is not excuse for perpetuating some of the dodgy business practices and dubious claims that only serve to damage the reputation of our industry. They should clean up their act rather than behaving like an estate agent equivalent of Wonga. Nigel Adams. Managing Director. BigBlackHen.com

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    'CEILA demands'. *inserts crying with laughter face*
    If the people behind this spent all the time they are spending engrossed with PB focusing on growing market share they wouldn't need to worry about PB.

  • Simon shinerock

    PB will stand or fall on their real reputation, anything else is not sustainable. PB is in my view a variation of private advertising using RM/Z to cut out the agent at a relatively high price. They do have some clever tech on their side and they could evolve the service. I'm not fond of the language tone and length of CIELA's complaint but I think there is some substance to the points made and PB should be held to the same trading and advertising standards as everyone else.

  • Colin Bain

    Jealousy ?

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    Section 5s of the TPOS Code of Practice refers to "a commission fee". Quote unquote. This is in one and the same breath, so I think trying to differentiate between a percentage commission and a fixed fee for services of a given description is going to be very difficult to substantiate.

  • Mark Scobey

    So CIELA have a problem with some of the wording and claims of PB, but the very independents they represent have been fined for running a cartel (https://www.estateagenttoday.co.uk/breaking-news/2017/3/four-estate-agents-pay-370-000-after-admitting-price-fixing). PB don't fit the criteria for membership when it comes to CIELA so why is there the continued need to attack them? Surely you'd focus on the positives of the agents you represent rather than the negatives of those you don't. And don't for one moment think that independents don't make misleading claims. Local to me, Marriots claim 30% of the local market and Rightmove says it's 5%!

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