As the OFT seeks a court injunction banning five companies from distributing prize draw scratch-cards, does this mean a more heavy-handed OFT when it comes to protecting consumers’ rights against promoters? Zoe Hare scratches below the surface.
Topic: Promotion marketing
Who: Office of Fair Trading and Purely Creative Ltd, Strike Lucky Games Ltd McIntyre & Dodd Marketing Ltd, The Winners Club Ltd, and Dodd Marketing Ltd
When: 11 January 2010
Law stated as at: 25 January 2010
On 11 January 2010, the Office of Fair Trading ("OFT") issued a press release confirming that it has commenced High Court proceedings against five companies and certain individuals within those companies behind UK prize draw promotions.
The companies involved promote premium-rate prize draw scratch-cards and distribute the cards via magazines, newspapers and direct mailings.
The OFT has sought a court order prohibiting mailings and distribution of scratch-cards by those companies which the OFT considers to be misleading. The proceedings have been brought under the Enterprise Act 2002 on the basis that the promotions breach the Consumer Protection from Unfair Trading Regulations 2008.
The press release states that "the OFT considers the promotions are legally unfair because they:
(a) create the impression that the recipient has won a prize, which in fact cannot be claimed without incurring a cost, such as through a premium line telephone call or a payment for "insurance and delivery;"
(b) deceive consumers into believing they have been particularly fortunate to have been selected or to have won a prize;
(c) deceive consumers that a prize is of a high value; and
(d) omit information, or provide ambiguous information, about the chances of winning, costs of claiming, and terms and conditions of the prize draw.
The injunction is being sought against Purely Creative Ltd, Strike Lucky Games Ltd McIntyre & Dodd Marketing Ltd, The Winners Club Ltd, and Dodd Marketing Ltd. Action is also being taken against a common director and secretary of all companies, a director of Purely Creative Ltd and a director of The Winners Club Ltd.
The OFT reports that all the companies strongly contest the injunction and have refused to stop their promotions.
Why this matters:
This recent case demonstrates that the OFT is highly active in protecting consumers' rights in cases where it perceives that consumer detriment is likely. Further, it shows that the OFT will not shrink from seeking court orders against companies and individuals where they have been unable to negotiate a voluntary agreement.
It is likely that the activities complained of would, if established, also involve illegal lotteries falling foul of the Gambling Act 2005, but given the Gambling Commission's track record to date of enforcing this legislation, it is probably best that the OFT is making the running.