To protect vulnerable UK citizens, the UK’s Office of Fair Trading pursued Best Sales of Holland in the Breda courts over allegedly misleading prize draw mailings. But were UK punters so naïve? Ebba Hoogenraad, partner in Steinhauser Hoogenraad Advocaten of Amsterdam, reports the Dutch judge’s perhaps surprising verdict.
Misleading sweepstakes sent from the Netherlands?
For some time, the Dutch company Best Sales has been sending misleading sweepstakes to British citizens: a personally addressed brochure in bold colours, and the statement that the addressee is the lucky winner of GBP 10,000.
A sales brochure is included, along with a form to be completed. The order form already includes an order, and the misleading suggestion is created that one should place this order, "for increased security", to be eligible for the first prize.
Since the Office of Fair Trade (OFT) had received a great many complaints about these misleading sweepstakes, sent from the Netherlands, the OFT initiated proceedings in the Netherlands to put an end to the activities of the Dutch company Best Sales. Unfortunately, in its judgment in preliminary relief proceedings on 24 October 2006, the Dutch court rejected the claims.*
Why? The court ruled according to Dutch law. The Unfair Commercial Practices Directive 2005/29/EC has not yet been implemented in the Netherlands. The mandatory implementation date of 12 June 2007 will probably not be met. The court ruled according to the standards of the Dutch act on misleading advertising, assuming the Gut-Springenheide Consumer as indicated by the Court of Justice ('an average consumer who is reasonably well informed and reasonably observant and circumspect').
The court believes that British consumers, upon first reading, will, indeed, believe it is necessary to place an order. However, an average, circumspect consumer may be expected to then read the small print in the general terms and conditions. And Best Sales had been clever: both the general terms and conditions and on the pre-completed order form stated, in small print on the vertical side of the form, that there was no obligation to purchase. It is true that the order list does state 'for increased security, please return the whole page', but if the consumer takes a good look at the form, there is a dotted line with an image of scissors halfway down the form, from which the consumer can deduce that one can also send only the upper part of the sweepstake form without placing an order.
The court then goes on to offer an opinion on the presumable British consumer: the OFT had argued that the mailings sent by Best Sales were directed at older individuals with a poor education, and that for that reason, a stricter assessment of misleading should apply. However, according to the court, the OFT was unable to sufficiently prove this statement. The court subsequently held that it is plausible that English consumers often receive such sweepstakes without having requested them. Sweepstakes are allowed in Great Britain. People are used to this types of mailings, and accordingly, more attentiveness may be expected of them, and there is no misleading. As long as the Unfair Commercial Practices Directive has not been implemented, the court does not find this mailing to be in contravention of Dutch law (yet).
There was also surprise at the decision in the Netherlands. Trade journals have already critically discussed the decision. First of all, because the court only rendered an opinion regarding misleading with regard to the obligation to place an order. The OFT had also requested a conviction because of the misleading suggestion that one is a winner. The court did not devote a single word to that.
A second bone of contention is that, since 2006, specific rules apply to, among other things, sweepstakes, in the Netherlands under the Dutch Betting and Gaming Act. These are laid down in a Gedragscode Promotionele Kansspelen [Dutch Code of Ethics regarding Promotional Games of Chance]. Sweepstakes are permitted, unless they create the misleading impression that one has won. An example given is the statement, in large print, that the addressee has won a prize, without putting this into perspective. Best Sales' sweepstakes mailing is, without doubt, in contravention of this Code of Ethics. This means that, at the least, the court should have ruled on what prevails in the case of cross-border sweepstakes: this (stricter) Dutch Code of Ethics, or merely the principles as laid down in the decision by the European Court of Justice, assessed using the Gut-Springenheide consumer. For all these reasons, the OFT has meanwhile lodged an appeal. The Court of Appeal is expected to rule on the matter at the end of this year. Perhaps, Best Sales will then be fully convicted, including the requested ban and the rectification.
Once the Unfair Commercial Practices Directive has been implemented in the Netherlands, the OFT will be able to present such requests for action against Best Sales and similar companies directly to the Dutch Consumers Authority. This body will then have a range of legal options for taking action. Among other things, it will be authorised to conduct an investigation of the advertiser, but also of the target group of the sweepstakes and the address files …
This will lead to many new legal questions and case law.
*Preliminary Relief Court Breda, the Netherlands, 24 October 2006, Office of Fair Trading / Best Sales, 164063/KG ZA 06-405, IPL 2007, issue 1.
Mrs Ebba H. Hoogenraad
Steinhauser Hoogenraad Advocaten