ASA UK Rules it Safe to Advertise Monthly Contracts as “No Contract”

When is a contract not a contract? A small but interesting ruling by the UK Advertising Standards Authority has cleared up a confusion over whether service providers should be allowed to promote short monthly (30 day) style contracts as “no contract” products.

It’s common practice for providers that offer rolling monthly contracts to promote services as “no contract” in advertising and the short term nature of such deals usually make it fairly easy to leave whenever you want, although whether or not the provider chooses to refund any remaining days from a particular pre-billed service does vary.

Never the less we have occasionally witnessed situations where consumers felt as if the “no contract” wording was misleading, which reflects a similar complaint by six individuals against various TV and website adverts for Sky’s broadband-based NOW TV Internet video streaming service.

Sky said that the use of “no contract” to reflect rolling monthly terms was already synonymous with “no long-term contract” because, they claimed, it offered consumers the opportunity to pay for content on a month-by-month basis rather than committing for a year or more. Sky added that consumers could also “dip out” at any time.

ASA Ruling (REF: A15-297851)

The ASA acknowledged that purchasing the monthly NOW TV passes technically constituted a legal contract. However, we considered that the average consumer would understand, in the context of the ads, that the claim meant that there was no long-term commitment or minimum term associated with the products beyond the period already paid for (or subject to a free trial) and that there were no cancellation charges.

We understood that the entertainment and movies passes renewed automatically each month but that there was no minimum term and they could be cancelled at any time with no notice period or cancellation fee. … We considered that the ads made clear that the monthly passes would renew unless cancelled and concluded that, in this context, the claim “no contract” was unlikely to mislead consumers.

In other words, it’s fine to describe such a service as “no contract” so long as you don’t do anything to prevent or inhibit customers from leaving (e.g. charge an exit fee) and that seems acceptable. Mind you we would have liked to see the ASA’s position on refunds for any unused days of service, although that’s rarely a big issue for monthly term services (sometimes the admin for a refund would risk costing more than the refund itself).

The ruling currently only applies to Sky’s NOW TV service, although its conclusion could just as easily be expanded to any number of other broadband and phone providers that promote their services as “no contract“, despite still technically applying a 30 day or monthly term.