When South California retail chain Ralph’s offered customers who spent $400 a free two night hotel stay, ads did not include the small print restrictions. Now they have been ordered to make restitution to thousands of disappointed customers. For the sad story and whether it could happen here, go to
Topic: | Promotion marketing |
Who: | Ralphs Grocery Co and the California Attorney General |
Where: | The California Superior Court |
When: | July 2004 |
What happened: |
As reported on 'advertisinglaw@Manatt,' the on-line ad law newsletter from US law firm Manatt, Phelps and Phillips, leading Southern California supermarket chain Ralphs were on the wrong end of a consumer protection suit. The case had been brought by California Attorney General Bill Lockyer.
The cause of the problem was an in-store promotion for Ralphs 'Clubcard' customers. For each $400 spent on qualifying purchases made at Ralphs stores between 4 June and 15 July 2003, Clubcard holders were entitled to vouchers which could apparently be redeemed for a free 2 night hotel stay.
Disappointed customers
Thousands of Ralphs' customers participated in the promotion, but were disappointed when terms and conditions governing when and how the voucher could be redeemed made it practically impossible for them to actually use the voucher. What was worse, advertisements for the promotion had failed to mention any of these restrictive conditions.
Ralphs' conciliatory offer of $50 or $100 coupons towards a hotel stay did not placate customers, particularly as they were offered only on condition that a release form was signed completely absolving Ralphs of any legal responsibility.
The ensuing suit by the California Attorney General has now been settled. Ralphs will apparently pay $125,000 in civil penalties and $100,000 to reimburse the Attorney General's Office for its costs. It has also promised to provide disappointed Ralphs Club card customers who apply, with something close to what they failed to get first time round, namely a 3 day, 2 night stay in any Marriott-owned or operated hotel.
Why this matters: |
Although it is difficult to see any equivalent action by our own enforcers achieving the sort of eye-watering result obtained here by the California Attorney General, the relationship between a promoter and its participants is just as much a contract here in the UK as it is in the US.
Contractual exposure
This means that failure to disclose material limitations on the enjoyment of a promotional gift, in advance of participants committing themselves, can certainly give rise to liability for misrepresentation and/or breach of contract. It is imperative, therefore, that as the CAP Code also requires, all material terms and conditions applicable to the enjoyment of promotional offers, particularly important restrictions, are properly communicated to potential participants before the point of no return, and in all marketing communications that mention the promotion.
