Unilever's PG Tips slapped on the wrist over loyalty scheme

PG Tips owner Unilever has been found in breach of the advertising standards code for failing to make "reasonable estimate" of demand for a loyalty scheme.

The issue revolved around PG Tips' site, which advertised that the particular sales promotion would be closing.

The promoted allowed customers to collect points for buying tea and exchange them for gifts.

One person complained as she has been unable to redeem her points for a gift she did not already have. She challenged whether the ad was misleading because Unilever had not made a reasonable estimate of demand.

Unilever said the Cuppa Club was launched in May 2013 as an ongoing promotion, which could be terminated by giving members reasonable notice.

An email was sent to all Cuppa Club members informing them that the club would be closing. They were told they could register points until 11 August 2015 and redeem until 10 September 2015.

Unilever said that while the club was running it had monitored stock levels of gifts and had reordered them based on average redemption rates.

It said it took in into account the fact that the Cuppa Club had been running for two years; the number of active members; and the number of points accrued when evaluating its stock of gifts. It made a forecast based on average redemption rates and took advice from an external agency.

Unilever knew there was a likelihood that, based on the forecasts, that some of the most popular gifts would run out but said it has been confident there would always be a selection of gifts available for redemption for the full period.

However, as redemption rates were higher than expected popular items were low on stock.

Unilever said it had made reasonable estimates of demand and had taken adequate action to communicate with and provide alternatives for members.

Under the CAP Code promoters are required to demonstrate that they had made a reasonable estimate of likely response.

The ASA ruled: "We considered that, despite the information at their disposal, which included the number of points still to be redeemed, the number of active members and the relative popularity of the different gifts, PG Tips had not demonstrated that they had made a reasonable estimate of likely response and concluded that the ad was therefore in breach of the Code."

The company was told to ensure it could demonstrate it had made a reasonable estimate of demand in future promotions.

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