Foodpanda warned over misleading 'free delivery on all restaurants' ad for subscription service

SINGAPORE: Food delivery platform Foodpanda has been warned for a misleading advertisement for its Pandapro subscription service, the Competition and Consumer Commission of Singapore (CCCS) said on Wednesday (Nov 20) in a statement.

Promising “unlimited free delivery on all restaurants”, the misleading ad ran on multiple platforms including Foodpanda's Instagram page, its in-app marketing, billboards and signage at public areas including bus stops.

The ad ran from Jul 1 to Sep 30, CCCS said.

CCCS began an investigation in August following a complaint about the ad. 

"Without any qualifiers, it could mislead consumers into thinking that Pandapro subscribers would enjoy free delivery on all restaurants available on Foodpanda," CCCS said.

Pandapro subscribers would only receive a discount of S$3 on delivery fees for all restaurants, going up to S$6 for selected restaurants.

Contrary to the advertised "free delivery on all restaurants", the CCCS found that over 40 per cent of food delivery transactions made by Pandapro subscribers while the ad was running had required a residual delivery fee to be paid after the discounts were applied.

Foodpanda has acknowledged CCCS' concerns and agreed to provide a full refund of subscription fees to customers who subscribed to Pandapro during the advertising period and provide clarification to those customers as well as the public on the terms of its Pandapro subscription.

The delivery platform will also have to review its existing and future marketing materials for its Pandapro subscription to ensure compliance with Singapore’s fair trading laws, CCCS said.

CCCS issued a warning to Foodpanda's parent company Delivery Hero. It added that it "will not hesitate to take stronger enforcement action against Foodpanda if it engages in any misleading advertisements".

In response to CNA's queries, Foodpanda said: "We acknowledge that the terms and conditions required for Pandapro subscribers to enjoy free delivery could have been communicated more clearly."

Foodpanda added that it was reaching out to all new customers who had subscribed to Pandapro during the campaign period to offer refunds on a no-questions-asked basis. 

"We have since taken steps to improve our communication and ensure that all future campaigns are clear," said the spokesperson.

USING TERMS LIKE "FREE"

Businesses must ensure that any representation about the price of a good or service as being "S$0" or "free" is not false or misleading, CCCS said.

"Any explicit representation must clearly and unambiguously reflect what is offered to consumers."

Any qualifier, exclusion and incidental cost must be stated prominently together with the "S$0" or "free" claim. "A generic disclaimer such as 'terms and conditions apply' is not usually sufficient," CCCS said.

CCCS chief executive Alvin Koh said: "When a business offers 'free' services to entice the consumer to try a service, it is not unreasonable for an average consumer to understand 'free' to mean that nothing will be charged.

"It is crucial that businesses ensure that their claims are accurate. Transparent pricing is crucial for consumers to make informed purchases and to allow all businesses to compete fairly,"

The Consumers Association of Singapore, or CASE, supports the enforcement actions by CCCS, its president Melvin Yong said in a post on Facebook.

Those who encounter similar cases of misleading advertisements can contact the Advertising Standards Authority of Singapore to have them reviewed.