The Advertising Standards Authority has ruled in favour of deposit alternative scheme flatfair in a dispute which began with a complaint from a rival service.
Zero Deposit complained to the ASA, querying whether a claim in a flatfair advertisement was misleading and could be substantiated.
Although there are several other providers of deposit alternatives, flatfair and Zero Deposit are widely considered to be the two dominant companies in the fiercely-fought competition that characterises this sector.
The claim disputed by Zero Deposit in its complaint to the ASA was on flatfair’s own website and said: “Beat the deposit cap. Enjoy up to 12 weeks’ worth of protection and free recovery for any additional claims”.
Further text stated: "Keep your property protected. Get up to double the protection of a traditional tenancy deposit and significantly lower the upfront costs for your tenants” and“You get extra protection. Tenancy deposits are now capped at 5 weeks’ rent. Make substantiated end of tenancy charges for up to the value of 12 weeks’ rent through flatfair”.
Zero Deposit’s argument was that there was no contractual obligation on flatfair to provide the protection it suggested.
The investigation from the ASA produced a response from flatfair agreeing that there was no contractual obligation to compensate landlords where the tenant did not honour in full their financial obligations under the tenancy agreement - but that did not mean that landlords could not be confident of protection from its product.
The ASA statement says: “flatfair said that their service protected landlords in a way that did not exclude prospective tenants who may be unable to pay an upfront deposit of five weeks’ rent. Tenants could subscribe to flatfair by paying a one-off fee equal to one week’s rent plus VAT. When the tenancy ended, the landlord or their agent would calculate any outstanding amount considered to be contractually due from the tenant and notify the tenant via flatfair’s online portal. The landlord and tenant could then negotiate the amount via the portal. In line with the process for traditional deposits, if they could not agree a figure between them, the matter was referred to a government-authorised deposit dispute resolution scheme.”
The authority agreed with flatfair and rejected Zero Deposit’s complaint.
The authority’s statement, issued this morning, says: “The ASA considered that landlords looking at the website would understand ‘Keep your property protected’ to mean that flatfair offered a product that would enable them to recover costs (such as rent or costs relating to damage to the property) in the event that they went unpaid by their tenants.”
It continues: “Text further down the page stated ‘You get extra protection. Tenancy deposits are now capped at 5 weeks’ rent. Make substantiated end of tenancy charges for up to the value of 12 weeks’ rent through flatfair’. We noted that, since deposits in England were capped at five weeks’ rent, ‘double’ a traditional tenancy deposit was actually equivalent to 10 weeks’ rent rather than 12. However, considering the page as a whole, we considered that landlords would understand that flatfair’s service could enable them to recover costs equivalent to 12 weeks’ rent.”
The ASA adds that there is nothing in flatfair’s advertisement to suggest that a contractual obligation was required for the service to provide the protection.
The ASA’s statement concludes: “We considered that was sufficient to substantiate that flatfair provided ‘protection’ at the level stated in the ad, as landlords were likely to understand it in context. We concluded that the claims ‘Keep your property protected’ and ‘Get up to double the protection of a traditional tenancy deposit’ had been substantiated and were therefore not misleading.”