The Australian Securities and Investment Commission (ASIC) has pulled retailer Woolworths (ASX: WOW) into line over a claim made in one of its advertisements regarding Woolworths Car Insurance.
The ad in question claimed that on average customers saved $240 by switching to Woolies insurance. Upon investigation ASIC discovered that the claim was based on 109 customers who had all purchased comprehensive car insurance. ASIC deemed the comparison between insurance policies required qualifications and was potentially misleading. Woolworths has agreed to change the ad campaign.
Woolworths and Coles, owned by Wesfarmers (ASX: WES), have both been expanding their presence in the insurance market. So far Woolies has released policies for car, home, building, contents, life and pet insurance, while Coles is offering car, home and building insurance.
ASIC is certainly keeping companies that advertise financial services and credit on their toes. In the past 18 months the regulator has also brought actions against Commonwealth Bank (ASX: CBA), HSBC, RAMS and GE Money as well.
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
