Prize-draw promoters have hands slapped by ECJ
Prize-draw promotions that mislead consumers into thinking they have won a valuable prize or encourage them to call premium-rate numbers may be unlawful, the European Court of Justice (ECJ) has ruled.
Last February, the Office of Fair Trading (OFT) successfully sought a High Court injunction preventing several companies and individuals from promoting prize-draw scratch cards which it considered misleading, through magazines and newspapers or by direct mail. This was the first case to reach the courts under the Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277).
The regulations prohibit businesses from describing a product as “free” when it’s not or creating a false impression that the consumer will win a prize.
The OFT objected to several promotions involving individually addressed letters, scratch cards and advertising inserts placed into newspapers and magazines. All but one encouraged the consumer to call a premium rate number, and 99% of all winners won a prize worth just a few pounds.
The Court of Appeal asked the ECJ for guidance. The ECJ noted the psychological effect on consumers of being told they had won a prize, agreed with the OFT’s position, and set out guidance for trader behaviour.
Peter Stevens, partner at TWM Solicitors, says: “It will be interesting to see how such prize promotions change in the future.
“Promoters will either have to be much more up front about the value of the prizes which are likely to be won and the costs involved in collecting them, or the promoters will have to absorb all such costs and, presumably, reduce the value of the prizes accordingly.”
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