The Advertising Standards Authority may appear to be all-powerful over advertisers, but two major advertisers claim they have no rights over the regulation of advertising by non-members of the ASA.
Two cases between advertisers and the Advertising Standards Authority (ASA), currently featuring in the Johannesburg High Court, could have major implications for the ASA’s exercise of its powers.
Solal Technologies and Groupon have applied to the court to limit the ASA’s powers. Deal-of-the-day website Groupon claims the ASA has no right to regulate online or any other advertising by non-members of the ASA. Solal, which sells over-the-counter supplements, has the same complaint and many others related to the authority trying to ban its ads.
At the core of the issue, says attorney Saul Shoot, is that the ASA is a company, incorporated under the Companies Act, not a statutory body, and therefore only has jurisdiction over its voluntary members. Shoot says the ASA has admitted in High Court affidavits that non-ASA member advertisers who are the subject of complaints are entitled to ignore the standard letter it sends to them.
Shoot has a great deal of litigation experience against the ASA, having represented both Solal and Groupon in these matters. Solal, especially, is known as a repeat litigator against the ASA. And it is just one of many ‘complementary medicines’ advertisers whose ads have been banned by the ASA.
The ASA has made hundreds of such rulings, some of which have been “groundbreaking”, says ASA manager of dispute resolution Leon Grobler. These rulings have protected the public from misleading advertising claiming to heal all sorts of illnesses and aid weight loss. Neither Grobler nor ASA head of legal, Freddy Makgato, wanted to comment on the cases in the high court, saying they were still sub judice. However, Grobler did say that “Solal’s gripe with us is the way we approach substantiation”.
Shoot says the ASA does not have the medical expertise to evaluate substantiation. The authority also places the burden of substantiation of advertising claims on advertisers, which has the effect of presuming all advertising is false unless otherwise proven, he adds. “The ASA has ignorantly and irrationally banned true advertising claims that are in the public interest. For example: ‘Too much sugar can cause weight gain and diabetes.’ This is despite the fact that the World Health Organisation and conventional medical wisdom accept these advertising claims as true,” says Shoot.
Many of the ASA’s rulings in complementary medicines cases result from complaints from consumer activists and others like the Treatment Action Campaign. They were premised on the ASA’s claim to authority over the regulation of medicines advertising. However, it doesn’t actually have this authority, says Shoot. The ASA has no statutory power, no medical expertise and is actually a risk to public health, he adds.
Consumers “with vendettas” have found it easy to complain about complementary medicine advertising, says Shoot. Marketing consultant and former head of legal at the ASA Stefan Vos agrees. “There is a little group that has somehow turned the ASA into a quasi medicines regulator,” he says. The ease of the process is in part due to the fact that consumers are not obliged to pay any fees, whereas advertisers must pay thousands to appeal against a ruling.
The ease of complaining was also due to a section of ASA’s Code called Appendix F. The code contains a number of appendices, each of which is dedicated to a specific industry and is ‘owned’ by a stakeholder in that industry. Appendices F and A were allegedly ‘owned’ by the Medicines Control Council (MCC), a legal regulator. The MCC’s mandate underpinned the ASA’s right to rule on medicines ads. Appendix F covered the use of complementary/alternative medicine and listed a number of diseases or ailments that advertisers could not mention in their ads unless their medicines were registered with the MCC.
Appendix F provides consumers with recourse to complain about ads that made claims to cure, among other conditions, HIV/Aids and cancer. However, it also contained some easily misconstrued wording for ailments, like “leg trouble”, “eye trouble” and “diseased ankles”. Even more so because sunglasses and prosthetic limbs cannot be registered as medicines with the MCC.
Says Shoot, “A few years ago my client [Solal] started receiving Appendix F complaints… Activists would go to the ASA and say, ‘please ban [Solal] ads because your code says you are doing this on behalf of the MCC’.” Consequently, the ASA banned Solal’s ads for an Omega 3 supplement. Solal then went to the MCC and asked for a copy of its mandate. The MCC’s eventual response was that it was not associated with Appendix F at all. This means that the ASA had no authority to rule in medicines advertising and had been lying to the public for years, says Shoot.
The Appendix F issue formed part of Solal’s case when it went to the ASA’s Final Appeals Committee (FAC). On 3 February 2012, the FAC overturned the ban, though Judge Mervyn King did not address the Appendix F controversy in his judgment. The following day, the board resolved that the appendix would no longer form part of the ASA code. Shoot sees this as a clear admission from the ASA that it had lied about its alleged mandate from the MCC.
The ASA has denied these claims, saying in a court affidavit that it has had a ‘relationship’ with the MCC for three decades and that the MCC is well aware that the ASA regulates medicines advertising.
In 2012, advertising lawyer Gail Schimmel, another former head of legal at ASA, wrote about her concerns over the Appendix F issue. What bothered her then was not so much the validity or lack thereof of the ASA’s claim to regulate with the MCC’s mandate, but rather the ASA’s failure to communicate its decision to drop Appendix F from the code. The appendix stayed up on the body’s website after the board made the resolution and the ASA only announced the resolution six months later, in August 2012. Schimmel wrote then that she had continued in those six months to advise clients with the presumption that the code was still valid. Rulings invoking Appendix F, including one against Groupon, were made during that time.
This lack of transparency “was yet another symptom of an illness within the ASA”, wrote Schimmel. “[This] resolution has an enormous impact on countless advertisers who have been limited only because of Appendix F, despite holding excellent substantiation for their claims.”
Advertisers whose messages were in the public interest have been banned, says Shoot. The ASA presumes you are guilty until you can prove otherwise, appeals costs are ruinous to small business – and most of those businesses are not aware that they can legally ignore the ASA’s standard letter, he adds. This standard letter is written in a misleading manner, implying that the ASA has authority over non-members of the ASA and that they are obliged to respond to complaints, which is not the case, says Shoot. It looks and sounds so official that even experienced businesspeople are fooled, he adds.
Whatever happens in the High Court, the ASA could be given statutory powers as a regulator should it be successful in its bid to attain ombudsman status under the Consumer Protection Act. Shoot says this would have a catastrophic effect on medicine advertisers and the public, particularly in the context of irrational complaints and ignorant rulings banning true claims. Non-members of the ASA may then also be at risk as it would give the ASA some statutory power that it presently lacks.
This story was first published in the April 2014 issue of The Media magazine.
