Three group litigation firms have been told to stop running misleading online advertisements containing statements about the costs involved with claims.

The Advertising Standards Authority said the three rulings issued today are part of a wider piece of work on ads relating to group action litigation, following complaints received from business lobby group Fair Civil Justice.

The ban on making certain promises relating to potential compensation levels and that claims are no win, no fee, will curtail the marketing of group claims. It will also feed into an investigation announced this week by the Solicitors Regulation Authority into firms involved in this sector.

The ASA investigated Johnson Law Group, Jones Whyte Law and KP Law – each  regulated by the SRA and operating group claims.

In the case of Johnson Law Group, the firm had run paid-for Google and Facebook ads for diesel emissions claims which stated that drivers may be owed up to £10,000.

In one, the firm had said: ‘There’s a chance for you to claim up to £10,000 in compensation. Just grab your car’s registration number, head over to dieselcheck.com and boom, instantly find out if you’re eligible to claim those thousands.’

The firm went on to say that it operated on a no win, no fee basis, but that clients may pay up to 50% of damages plus the £70 cost of legal expenses insurance. In response to the ASA investigation, the firm said all the charging terms were set out and that website visitors were asked to check these before e-signing – although it was acknowledged that many did not. These contract terms also stated that customers were liable for fees and costs in the event they terminated the retainer after 14 days.

The ASA said there was no reference to a ‘retainer’ in any of the ads, and even the section which included ‘signed with an intention to enter into a legally binding contract’ was in a small font and less prominent than the rest.

‘Consumers were likely to e-sign without understanding that by doing so they were signing a legally binding contract. They were also likely to e-sign without reviewing the contract and all its terms,’ said the ASA. ‘We concluded that the ad did not make clear that by e-signing, consumers were signing a legally binding contract, and it was therefore misleading.’

In the case of Jones Whyte Law, the ASA found that its paid-for Facebook ads together did not present material information about the firm’s fee and how it was calculated, and did not explain that consumers may be liable for costs in some circumstances.

The firm had advertised for data breach clients on a no win, no fee basis with ‘no upfront costs to you!’ Jones Whyte said these statements were wholly correct and that clients were not asked to make any payments.

But material information about the firm’s charges – the firm deducted up to 40% - and the cost of insurance were not made clear, and the ASA said this should have been provided before clients made a decision about whether to proceed.

The decision on KP Law related to data breach referrals to the firm from a single claims generator called Join the Claim. In the FAQ section of the Join the Claim website, it was stated that the company did not charge consumers who signed up to join a claim, but it may take a fee from the law firm to which it introduced clients.

Join the Claim passed all leads generated from the ad to KP Law, with the firm charging a fee of up to 25% of the compensation awarded in a successful claim, with no other costs payable. The ASA considered that when presented with claims about fees and costs such as ‘no win, no fee’, the fee and how it was calculated was material information that the consumer needed to make informed decisions in relation to the product. These were not provided by the webpage advert.

All adverts must not appear against in their current form. KP Law and Join the Claim must make clear that the purpose of their ads is to generate leads for law firms, and when selling leads to only one law firm, make that clear and name the firm.

Johnson Law Group must not state specific compensation amounts that could be secured, while Jones Whyte must include material information about how fees and charges are calculated.