We look at why consumers on both sides of the Irish Sea are pursuing claims over promotional offers that turned out to be too good to be true.
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Topic: Promotion marketing
Who: Texas Homecare and Ryanair
When: February 2002
Where: UK and Ireland
What happened:
Two glamorous promotional promises made by advertisers operating in quite different areas have recently come home to roost. In the UK in 1992, the now defunct DIY retail chain Texas Homecare offered to refund the full cost of a kitchen after 10 years had elapsed from its installation. On the other side of the Irish Sea, in 1988 budget airline Ryanair offered its millionth passenger a prize of free flights for life. In both cases, individuals who believed they qualified to benefit have been disappointed. In the case of Texas Homecare, absorbed by Sainsbury's Homebase in 1995 and then off-loaded in turn by Sainsbury's to Schroder Ventures in 2001, five thousand consumers had taken up the original offer to refund the full kitchen cost. Schroder Ventures claims no involvement in the wrangle, whose total potential cost exceeds £15 million. At the time of the promotion, Texas Homecare set up an offshore trust fund to cover some of the costs of the deal and also took out insurance cover through an American insurer named MGI. This was designed to pay out if the claims exceeded what was in the trust fund, but MGI collapsed in 1994 and subsequent proceedings brought by Texas to clarify the matter did not achieve a clear resolution. While this rumbles on, the latest episode being a suggestion that the buck can be passed to those who advised on the selection of MGI to provide the relevant insurance cover, DTI warnings in 1997 about cash-back deals like this were clearly too late to save the many disappointed punters here from the aggravation they are currently going through.
In Ireland, it was Jane O'Keeffe from Dublin who qualified as the millionth passenger on Ryanair and thought she had been awarded the prize of a lifetime's free flights in 1988. From reports of the litigation which has ensued in the Dublin courts it appears that in 1997 she was told her free flights would be limited to just one flight a year. The proceedings which Ms O'Keeffe has now brought against Ryanair are for £275,000, being the estimated value of the number of free flights she believes she would have otherwise enjoyed until the end of her life. Ryanair's defence to the claim, it appears, is that there was no contract in place between themselves and Ms O'Keeffe before the prize was awarded. Accordingly the prize was a mere gift, which meant it was entirely open to Ryanair to withdraw, or change it at any time.
Why this matters:
In the Ryanair case, if Ms O'Keeffe had been unaware of the offer before she booked the flight which made her the millionth Ryanair passenger then, as a matter of UK law, Ryanair's defence of "no contract" would have considerable legs. Separately if Ms O'Keeffe had been aware of the prize on offer before she booked, then it is possible in theory that Ryanair would have sought to cover themselves for future changes in the prize by way of terms and conditions attached to the promotional offer. Even if these had been properly communicated to Ms O'Keeffe or made available for her to view before she booked her flight, however, EU-driven legislation controlling unfair terms in consumer contracts might have made it difficult for Ryanair to enforce any promotion term which allowed to them to fundamentally change the nature of the prize a few years down the line. Whether Irish law will approach the problem in the way we have indicated or whether the facts are as we surmise, we will have to wait and see, but both these stories have a serious message. Promoters should not assume that prizewinners will be so grateful and euphoric that they will meekly accept any promoter's subjective interpretation of what aprize actually means in practice. In the Texas Homecare case, cash-back deals of this ilk have, so far as marketinglaw is aware, become a thing of the past long since, but one suspects the sheer number of consumers involved and the not insignificant sums will mean that the saga will run and run. One message of the sorry tale is that, although it was certainly prudent for insurance to be taken out against the eventuality of over-redemption, this is not going to help much if the insurer goes under.
