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The UK's Advertising Standards Authority (ASA) has ruled that Sky's Now TV service did not mislead customers by advertising itself as a "no contract" service.

Concerns had been raised by consumers, who upon discovering that the service involved a short monthly contract, argued that the wording was misleading.

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A total of six complaints were made about Now TV's advertising campaign as a result, but the ASA has announced it will not be taking any further action.

Explaining its ruling, the ASA said: "The ASA acknowledged that purchasing the monthly NOW TV passes technically constituted a legal contract. However, we considered that the average consumer would understand, in the context of the ads, that the claim meant that there was no long-term commitment or minimum term associated with the products beyond the period already paid for (or subject to a free trial) and that there were no cancellation charges.

"We understood that the entertainment and movies passes renewed automatically each month but that there was no minimum term and they could be cancelled at any time with no notice period or cancellation fee.

"We considered that the ads made clear that the monthly passes would renew unless cancelled and concluded that, in this context, the claim “no contract” was unlikely to mislead consumers."

The decision permits Now TV to use the term 'no contract', as long as consumers have the option to leave or cancel their subscription without being charged a fee.

While the ruling currently applies to Sky’s Now TV service, it is likely to set a precedent as to how other services are advertised across the industry.

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