Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the Advertising Standards Authority.
Marketers claiming that their business has been established for a specific number of years or implying that their business has been established for a long time should hold documentary evidence (Rules 3.1 and 3.7).
Consumers might be persuaded by claims that a company is well-established or has a long history, especially in industries that might have a high level of failed or bankrupted companies. Consumers buying products that are backed by guarantee, especially those that claim to be valid for a long time (for example double glazing), want reassurance that that company will still be around should they need to invoke that guarantee.
A company (X) might have bought an existing or liquidated company (Y). It is likely that X wants to adopt Y’s brand heritage by continuing to advertise Y’s business name as a trading style and referring to Y’s trading history. That approach is likely to be acceptable provided the purchasing business (X) can demonstrate that it has assumed the liabilities of Y, by paying Y’s debts, for example, and honouring Y’s guarantees. In 2008, two complainants questioned the claim “10,000 satisfied customers can't be wrong” because they believed the company had been trading only for a year or so. The ASA adjudicated that, because it was unable to show it had taken on the debts and liabilities of the previous company, the advertiser was unfairly trading on the reputation and trading history of an earlier incarnation of the same company (Minster Windows Ltd, 16 January 2008).
If the marketer can demonstrate a period of continuing trade, it should be acceptable for a business to refer to that heritage even if its trading name has changed or the business has moved premises during that period (Radford (Bavarian) Ltd, 16 March 2005). The ASA has ruled against an advertiser that could not demonstrate an uninterrupted and stable trading history (Barry Allsuch and Co LLP, 21 May 2008).
In certain circumstances, the law regulates what claims are permitted, especially if a purchased business run by the same people had gone into insolvent liquidation or if competing claims to ownership of the goodwill and a likelihood of confusion exist.
Last modified : 30 July 2010