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Is the ASA flouting the CPA?

Does the Advertising Standards Authority flout the Consumer Protection Act, which prohibits false, misleading or deceptive misrepresentations?
Is the ASA flouting the CPA?Introduction

1. Some time ago, a former Head of Legal and Regulatory Affairs at the ASA (Advertising Standards Authority of South Africa) and now a practicing Attorney, Gail Schimmel, commented that she was deeply concerned about symptoms of "an illness within the ASA".

2. In this article I discuss what seems to be a more chronic "illness within the ASA in the context of the Standard Letter the ASA addresses to advertisers in which it initiates complaints and induces advertisers who are not its members to participate in ASA processes, abide by ASA rulings and pay the ASA so-called "appeal fees" ("the ASA's Standard Letter").

3. In its Standard Letter the ASA incorrectly holds itself out as empowered to perform a regulatory function and exercise jurisdiction over all advertisers in South Africa and purports to be entitled to sanction and effectively ban what it deems to be offending advertising in all media throughout South Africa.

4. Ironically, according to the ASA itself, however, non-members of the ASA are legally entitled to ignore the ASA's letters, procedures and rulings and it has no jurisdiction over website advertising.

5. Despite these concessions in High Court affidavits, the ASA continues to subject non-member advertisers (including website advertisers) to its Code, procedures and rulings, and extract funds (so-called "appeal fees"), from them all on the strength of the ASA's incorrect non-disclosures.

6. The ASA's Standard Letter may well contravene Section 41 of the Consumer Protection Act No. 68 of 2008 ("the Consumer Protection Act") which prohibits false, misleading or deceptive misrepresentations.

The ASA, its articles and Code

7. The ASA is not clothed with statutory or regulatory powers[1]. It is a company registered and incorporated pursuant to the Companies Act of 1973. As such, its powers are circumscribed by its Memorandum of Incorporation and Articles of Association ("Articles").

8. In essence, the ASA's Articles expressly provide it to be a self-regulatory body whose membership is voluntary and whose rules only bind its members. In this regard the ASA's Articles provide (inter alia) that :

8.1 one of the main aims of the ASA is to "adopt and enforce, as far as reasonably possible, a code of advertising ... which sets out the rules which advertising men ... agree to follow ... through self-imposed regulation, ... ;

8.2 the ASA seeks to persuade all persons, corporations or organisations or anybody to which they may be affiliated to become members of the ASA.

9. The ASA presently only has about 20 members which have "agreed" to be bound by the ASA's Code and voluntary system of self-regulation. The vast majority of other "persons", "corporations" and "organisations" in South Africa have not however been "persuaded" by the ASA to become members of the ASA and accordingly have not volunteered to be subject to the ASA's Code and system of voluntary self-regulation.

10. The ASA has published its own Code of Advertising Practice ("the ASA Code"). The ASA Code provides that the ASA may ban advertising in South Africa, by directing certain media, including effectively the whole of the print and television media in South Africa, not to publish or accept advertisements for publication.

11. The ASA's Code is accordingly general and coercive in effect in that it provides that advertisements that fall foul of its rulings cannot be published throughout most media in South Africa irrespective of whether or not the advertiser is a member of the ASA, subject to its jurisdiction or even privy to a contractual relationship (such as a service agreement) with the ASA.

12. The ASA, however, fully appreciates the limits of its powers and jurisdiction as circumscribed by its Articles and has accepted in High Court Affidavits that the ASA Code binds only its members and no other party ; the ASA does not have jurisdiction over non-members of the ASA and that non-members of the ASA are accordingly legally entitled to ignore the rulings and procedures of the ASA.

13. Significantly the ASA also appreciates and accepts that by virtue of its limited membership and its limited powers (set out in its Articles) that it has no jurisdiction whatsoever in respect of website advertising and advertising which appears in other media of non-members of the ASA.

The ASA'S Standard Letter to non-member advertisers

14. The ASA however operates contrary to the recognised limits of its jurisdiction as enunciated in its Articles and accepted by it in High Court Affidavits. Any advertiser who has ever received a complaint from the ASA will be familiar with the ASA's Standard Letter pursuant to which it initiates complaints against advertisers.

15. In the ASA's Standard Letter, the ASA typically notifies advertisers that a complaint has been lodged against its advertising; calls on the advertiser to respond to the complaint and prove the truth or accuracy of its advertisements within a brief and arbitrary deadline unilaterally stipulated by the ASA ; threatens that in the absence of a response from the advertiser, a ruling will be made against the advertiser; threatens to impose sanctions such as an Ad-Alert against the advertiser in the event of an adverse Ruling by the ASA, and notifies the advertiser that it is entitled to appeal against an adverse ruling if aggrieved, subject however to payment by the advertiser to the ASA of appeal fees exceeding R150 000 per advertisement.

The ASA'S non-disclosures

16. Conspicuous in its absence from any of the ASA's Standard Letters initiating complaints against advertisers, is a disclosure of the material facts that :

16.1 the ASA does not have jurisdiction over persons who are not its members;

16.2 the ASA Code binds only its members and no other party;

16.3 the ASA has no jurisdiction over website advertising or advertising placed with other media who are non-members of the ASA;

16.4 Advertisers who are not ASA members are legally entitled to ignore the ASA's Standard Letters rulings and procedures.

17. It seems that the ASA is duty bound to disclose these material facts to advertisers to whom it addressed its Standard Letters initiating complaints.

18. Arguably, many (if not most) of the recipients of these Standard ASA Letters were and are induced (often at great cost and inconvenience) to respond to ASA complaints and participate in ASA processes under the mistaken belief that they were or are obliged to participate in the ASA processes (including ASA appeals) and abide by ASA rulings - which such advertisers were and are legally entitled to ignore.

19. Section 41 of the Consumer Protection Act deals with "False misleading or deceptive misrepresentations". It prohibits the use of innuendo or ambiguity as to a material fact or the failure to disclose a material fact " ... if that failure amounts to a deception". It also categorises the failure to correct a misapprehension as "...a false, misleading or deceptive misrepresentation" (emphasis added).

20. It seems to be an indictment on the ASA that it continues to call on advertisers who are not members of the ASA and website advertisers over which it has no jurisdiction, to respond to ASA complaints, participate in its processes, abide its rulings and pay the ASA appeal fees if aggrieved thereby, without informing such advertisers that they are not legally obliged to do so. The ASA continues to do this despite Section 41 of the Consumer Protection Act and the ASA's acknowledged lack of jurisdiction and power to do so and in the absence of any service agreement with such non-member advertisers.

21. Non-member advertisers who have been induced to respond to ASA Standard Letters; participate in ASA processes (including ASA appeals) and abide by ASA rulings, may well have actionable claims against the ASA, particularly if they were induced to pay the ASA so-called "appeal fees" and/or if they were subjected to negative publicity in the form of ASA rulings without being made aware of the ASA's limited jurisdiction.

[1] The Electronic Communications Act No. 36 of 2005 affords the ASA Code limited statutory recognition in regard to broadcasting service licensees which are members of the ASA.
    
 

About the author

Saul Aryeh Shoot is an attorney practicing inter alia in media law at Fluxmans Inc Attorneys.
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Kevin Charleston
Why don't you reveal yourself AnonASA? What a cowardly person to hide behind a pseudonym. Is that you Saul - playing sock-puppet? If so - all you've done ios drawn attention to yet more ridiculous assertions.
Posted on 15 Jul 2014 21:25
AnonASA
Mr Charleston, your comments make no sense in light of Mr Shoots further article on bizcommunity.com which exposes you and the ASA; see: http://www.bizcommunity.com/Article/196/12/114027.html
Posted on 2 Jun 2014 20:25
Kevin Charleston
Boy, lawyers do like to repeat themselves. And my experience with Saul Shoot is that he does so more than any other. Repeating the bit about the High Court affidavits so many times will not make it relevant in the way that Shoot wishes it to be though.

Despite writing it - he misses the basic principle: this is a self-regulating industry. The publisher of a national newspaper is also a member of a body that requires its members to conform to the ASA CAP. Since the newspaper or magazine is selling advertising space, it should ensure that these adverts do not breach the CAP. Failure to do so might mean censure or eviction from the parent organisation. Rather than setting up an entire chain of responsibility, this self-regulating industry is willing to allow the advertisers to be ‘schooled’ by the ASA.

Now, the advertiser is 100% allowed to ignore the ASA and its rulings. Some do ignore them – as the repeated infringements and rulings attest. But there’s the rub – all members of the ASA will get a notice asking that they do not publish any more adverts from that company – as a self-regulating industry, they generally comply. You can hold your breath until you are blue in the face – but unless you cease to be a member of any trade industry group which is also requires abiding by the ASA CAP, and publish your own magazine or newspaper, you aren’t going to get your advertising published.

But wait – that’s exactly what one of Shoot’s clients did. Solal resigned from the Health Products Association (which demanded adherence to the ASA CAP), stopped printing adverts in major newspapers – and invested large sums in its own magazine (Health Intelligence) http://www.camcheck.co.za/hi-magazine . Shoot fails to mention that one of the issues before the High Court (affidavits etc) is for Solal.

To suggest that the ASA’s CAP does not apply to his client who is not a direct member, is like suggesting that his client does not have to comply with the Medicines Control Council because they don’t own the pharmacies through which the products are sold.
If I park my car in a multi-story car park and set it on fire, the owners of the garage are probably quite reasonable sticking up a picture of me which says “don’t let this guy park here again”. If I want them to take it down and allow me to park there again – I’d probably have to sue them, paying the necessary legal costs to do so. You’d have to be pretty thick to believe they would just let me set fire to my car in their garage again without resolution and recompense. And yet, this appears to be what Shoot wants you to believe. His clients should be allowed to publish as many untrue adverts as possible – and they can do that without paying any penalties or being prevented from doing so.

Then there’s the bizarre notion that somehow the Consumer Protection Act should prevent the ASA from sending out letters that don’t mention that they are not allowed to fine you for illegally setting your car on fire in the street.

Shoot must first negotiate the distracting point that “Consumers are persons to whom goods or services are marketed, who have entered into transactions with suppliers, users of particular goods or recipients/beneficiaries of services.” I really don’t see where his client fits that description. Under what perverted distortion of the definition of “consumer” can we describe his own client who has so often failed to pass muster with the ASA?

Next he omits the full sentence of the section of the CPA he quotes: “41. (1) In relation to the marketing of any goods or services, the supplier must not, by words or conduct”. How is it that he believes that the execution of a self-regulating industry – is in any way “marketing of any goods or services”?

But Shoot should know all about letters of demand. After all, I have been on the receiving end of one of his http://www.camcheck.co.za/solals-astonishing-demand/ . Observe closely his own lack of explaining that I am free to ignore him completely.

Full Disclosure: Solal (through Saul Shoot) have laid a defamation suit against me for this article published on Quackdown. http://www.quackdown.info/article/health-intelligence-magazine-it-marketing-or-education/ . Section 27 is supporting me in this matter. We have responded, and they have failed to pursue this complaint further –the ball is firmly in their court. I believe that their reluctance to proceed is because their only intent was to try and frighten me into silence. Details of their complaint and our response is here: http://www.quackdown.info/article/solals-slapp-suit/
Posted on 26 May 2014 22:35
Harry
Saul Shoot is misleading readers. The ASA would not oppose Solal's High Court action if what he says is true: they would have to be fairly stupid to do so. Did Judge Mervyn King not have a hand in the ASA opposing Solal's action? Furthermore, Shoot does not inform readers that he represents Solal who sell a range of dubious health products with little scientific evidence to back up their claims, and are trying to impede the ASA from ruling against their nonsense claims.
Posted on 26 May 2014 16:52
AnonASA
Hi Gail, This is not correct. The ASA has no responsibility let alone any legal entitlement to rule in respect of non member advertising including website advertising and advertisings not placed via members of the ASA. Moreover their attempt to get non-members to pay in excess of R180 000.00 non refundable appeal fees is quite frankly extortion/fraud for which the ASA board members ought to be held criminally liable for.
Posted on 22 May 2014 15:12
Gail Schimmel
Gail Schimmel
I need to clarify some points - the least being that I am not a practising attorney but a consultant; and the most important being that, while I think there are some real and worrying issues within the management of the ASA, those reflected in this article are not points with which I agree.

The ASA has a duty to its members to investigate ALL complaints about advertising so that media members know whether or not to accept that advertising. While a non-member need not co-operate with the ASA, a ruling must still be made in terms of the contract with media members, who are then contractually obliged not to accept offending advertising. In the case of TV and radio, the station will lose its license if it does not comply.

I remain concerned about other issues in the ASA but I respect and support the ASA's mandate to investigate non members and web site advertising.
Posted on 22 May 2014 14:46

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