Trading standards officers have called for new laws to curb ‘dodgy’ prize promotions in which consumers are asked to fork out to find out they have not won. But do we need new laws?
Topic: Promotion marketing
Who: Trading Standards Institute, Purple Rock Solutions Limited, Bristol Trading Standards, Pokie Limited and Cutting Edge Telecom Limited
Where: The UK
When: October 2004 – January 2005
We have often complained on marketinglaw.co.uk about the regularity of "complaint upheld" findings by the Advertising Standards Authority in respect of "you have won" prize promotion mailings. We have warned that unless the practice is brought to heal, specific outlawing legislation along the lines of that introduced in the last few years in the US may be the inevitable result.
In recent months, the Trading Standards Institute has issued a loud call for the introduction of new laws to cut dramatically the flow of cash to fraudsters behind dodgy prize competitions. On the other hand, enforcement action is starting to be taken on the basis of existing laws in respect of some of the more egregious cases.
In the case of Purple Rock Solutions Limited, a premium rate telephone line was involved so the premium rate line watchdog ICSTIS (The Independent Committee for the Supervision of Standards of Telephone Information Services) took action.
What started the process was a mail-shot stating that recipients had won a prize and inviting them to call a premium rate number to find out what they had won and how to make a claim. Things then following their normal depressing course including failure to give proper prominence to the call costs, failure to give prominent display to a crucial term requiring callers to pay a handing and delivery charge of £14.95 in order to claim any prize and a failure also to give proper prominence to a provision that allowed the recipients to claim their item free of charge, in writing, without using a premium rate number at all.
Also of concern was the grouping of the supposed prizes together in such a way as to indicate they were all of equal status and callers stood an equal chance of winning any one of them. In fact, only very few of the larger prizes such a BMW Mini and a flat screen TV were actually available. There was also a complaint that the digital camera which most mailing recipients received if they sent off the handling fee of £14.95 was not the camera pictured in the mailing, which was a much higher specification. The mailing in question was sent out to 2.1 million people of whom 137,000 contacted the premium rate call line.
ICSTIS upheld the vast majority of the complaints in respect of the promotion and fined Purple Rock Solutions £10,000 as well as issuing it with a formal reprimand and barring it from access to the service for one year. In addition, it was ordered to offer full refunds to all complainants.
Bristol trading standards coup
Similar schemes operated by Cutting Edge Limited and Pokie Limited were recently the subject of prosecutions brought by Bristol Trading Standards under the Trade Descriptions Act ("TDA") and the Consumer Protection Act. The offence under the TDA was that false statements were made that consumers who received the communication in question were winners when they were not winners in any recognised sense of the word and for making false statements that consumers had been entered into a competition when there was no competition as such, merely the selection of names to whom the mail shot would be sent.
There were also guilty pleas to the prosecution under the Consumer Protection Act for misleading price indications. For instance, a computer was one of the prizes and it was implied that it would be provided free of charge when in fact the consumer was required to pay in order to get it. There was also an indication that the prize was definitely worth more than the cost of the call, when this was not the case.
All in all, the companies pleaded guilty to 83 offences and it is thought that this is the first time that criminal proceedings have been taken against prize draw scams linked to premium rate telephone lines.
Why this matters:
The Bristol prosecutions are indeed something of a first, but they do indicate that there is probably no need for new legislation to curb these activities, just more resources needing to be made available for the enforcers.