Fresh from a controversial and some might say scaremongering suggestion that new unfair commercial practices laws banned a particular promotional tool, surely the Institute of Sales Promotion has not done the same again? Stephen Groom looks at a recent ISP pronouncement.
Topic: Promotion marketing
Who: the Institute of Sales Promotion and the Office of Fair Trading
When: June 2008
Law stated as at: 18 June 2008
Oscar Wilde said that to lose one parent was a misfortune but to lose both looked like carelessness. Thoughts of O Wilde Esq might have to come to mind for many when promotion industry body the Institute of Sales Promotion ("ISP") made its second, shall we say, interesting pronouncement on the practical impact of the recently in force Consumer Protection from Unfair Trading Regulations 2008 ("CPRs").
The ISP "Guidance" related to one of the infamous "31". These are the thirty one specific commercial practices listed in Schedule 1 to the CPRs that will always be regarded as "unfair" and thereby putting any trader who engages in them in breach of the CPRs unless "due diligence" or "innocent publication" defences are available.
The practice in question is practice #31 ("UCP 31") which is as follows:
Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either
(a) there is no prize or other equivalent benefit; or
(b) taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.
The ISP guidance emanates from its Legal Advisory Service and is apparently based on "recent discussions with the OFT."
"OFT taking a strict line"
The ISP states that the OFT is "taking a very strict line" on UCP 31 and saying that it is contrary to the CPRs "to even require people to spend money on postage, for instance to send in a winning scratchcard."
The OFT was saying, according to the ISP, that there must be no cost whatsoever in the process of winning a prize for winners in claiming prizes.
Based on this, the ISP Guidance advised that there must be no charge or cost whatsoever for winners in claiming a prize. Instead there needs to be a Freepost facility or else a facility whereby the postage cost can be reimbursed.
Here at marketinglaw.co.uk we are not sure this is right.
There is the small matter of the words "Creating the false impression" in the opening words of UCP 31.
Surely this means that provided that any requirement to make a payment is clearly disclosed in the rules for the promotion and there is nothing else in the promotional material that contradicts this, there will be no falsity and therefore no unfair commercial practice.
Why this matters:
Embarrassingly for the ISP, this is not the first time that its advice on the CPRs has given rise to controversy.
Some time before the CPRs came into force, the ISP published an opinion on another of the "31".
This was "always unfair" practice #20 ("UCP 20") which is as follows:
Describing a product as "gratis", "free", "without charge" or similar if the consumer has to pay anything other then the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item.
There had been some concern that this might at a stroke criminalise "buy one, get one free" promotions, no matter how genuine and non-misleading the offer. If this were right, the CPRs would bring to an abrupt end an evergreen and widely successful promotional tool from which millions if not billions of UK consumers had benefited over the years.
For many this seemed unlikely and the OFT seemed to agree, including an example of UCP 20 in draft guidance on the CPRs which was as far from a "BOGOF" promotion as could be imagined.
Despite this, the ISP's guidance took the position that UCP 20 would indeed criminalise BOGOF promotions, an opinion that rapidly became difficult to maintain in the face of an OFT announcement to the contrary.
Far from making the BOGOF promotion illegal, the OFT said, UCP 20 expressly allowed such promotions. The cost of buying the one item that had to be paid for was "the unavoidable cost of responding to the promotion" and therefore four square within the use of "free" that UCP 20 expressly excluded from the prohibition.
There are rumours that other EU states are indeed taking the ISP position on UCP 20 and banning BOGOF promos, but here in the UK and thankfully for UK promoters and consumers, the ISP looks to have adopted an over-restrictive of this and now, it appears another of the "31".