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Direct Marketing Commission - Enforcing Higher Industry Standards

L-EV8 – Complaints about Direct Marketing

November 2014

The Direct Marketing Commission had received a complaint against L-EV8 Marketing from a consumer who had unwittingly signed up over two years previously to membership of their Pound Savers club. The club offer retail and other discounts and deals. Membership of this particular club is annual with an annual membership fee. When the complaint was presented to the Commission, it was found that the complainant’s membership fee had risen substantially in the second year seemingly without notification. . The Commissioners were asked to consider whether the company was complying with rules regarding the clarity of the sign up process which was conducted over the telephone, the ongoing renewal process, and their customer service.

The Commission’s decision was based on an analysis of the complaint as well as an investigation into L-EV8’s direct marketing activity overall from the point of sale to the ongoing membership including their auto-renewal process. Previous complaints had been received in relation to L-EV8’s customer service activity but this had been dealt with informally and remedial processes had been put in place.

L-EV8 told the Commission that they no longer signed up customers through cross-selling on the phone when these people called TV shopping channels to make some other purchase. Their marketing and customer acquisition is all online with subscribers joining and paying on a monthly basis. The customers from the TV sign-up era paid for an annual service and this payment was auto-renewed if the customer did not act to cancel the subscription before the renewal date. The complainant in question was part of a legacy club of such subscribers which continues to be served by L-EV8.

The investigation identified contradictions between the contractual undertakings to inform scheme members in writing of price changes and the procedure followed with price changes posted on the scheme’s websites. This process might be considered logical and adequate for new scheme members who signed-up on-line and have monthly payments and the ability to end a membership with immediate effect. The arrangement did not seem fair for members who had joined by phone, who were renewed annually, who received membership benefits by post as well as via an online option, who were of a different and older demographic and who might not have internet access.

During the course of the investigation, L-EV8 undertook in future to notify annual fee paying members of their forthcoming renewal date giving members the opportunity to cancel if they so wished before an annual payment fell due. L-EV8 also undertook to improve the communications process around price increases. L-EV8 had agreed to roll this new process out from January 2015.

On this basis and in relation to practices that are now to change the Commission concluded the arrangements were not fair and reasonable and upheld a breach of Clause 3.21 of the fourth edition of the DMA Code of Practice. The Commissioners were most grateful for L-EV8’s willingness to work with the Commission during this investigation, and their agreement to remedial actions to ensure they fall into compliance in future. There was a concern, however, over the time L-EV8 said it would take to put new arrangements in place. Given a ruling on Clause 3.21 in relation to existing arrangements the Commission look to L-EV8 to exercise sense and discretion in relation to any scheme member who contacts them in the interim period about an annual renewal payment that has been taken and where the individual did not want or intend for this to happen.