Case reference number: CRE-E/16752
Summary of work/background
Following OFT enforcement action against a number of prize draw
promoters, a landmark decision by the Court of Justice of the European
Union (ECJ) held that aggressive practices which give the consumer the
impression that he has won a prize while he is invited to pay a cost to
claim it are prohibited absolutely.
High Court Order
Purely Creative Limited and Strike Lucky Games Limited promote various
premium-rate prize draw scratch-cards which are distributed nationally
through inserts in magazines and newspapers. McIntyre & Dodd
Marketing Limited and The Winners Club Limited issue direct mailings.
On 22 December 2009 the OFT issued High Court proceedings against the
companies and individuals behind these prize draw promotions which the
OFT considered were misleading and in breach of the Consumer Protection
from Unfair Trading Regulations 2008 (CPRs). The action was taken under
the Enterprise Act 2002 (EA) for alleged breaches of the CPRs. The
companies believed that their promotions complied with the relevant laws
and guidelines and refused to cease their publication.
The OFT welcomed a landmark High Court ruling on 2 February 2011 that
the promotions distributed by the above mentioned companies and
individuals were in breach of the law. The Court indicated that it would
make orders (or consider accepting undertakings to the Court) against
the companies and its officers which would require them to cease or
otherwise discontinue breaches of consumer law identified in the
judgment. At a hearing on 17 March 2011, the Court ruled that it would
accept undertakings from the defendants. The undertakings were
incorporated into an
(pdf 139kb) and were endorsed by the Court on 10 May 2011.
Court of Appeal hearing
On 6 April 2011 the defendants (with the exception of the 9th defendant)
('the Appellants') appealed certain findings of the High Court in
relation to Annex Practice 31 of the CPRs. On 15 April 2011 the OFT
sought permission to cross-appeal.
The Court of Appeal issued a
(pdf 133kb) on 29 July 2011 in which it stayed the appeal and
cross-appeal and referred certain questions on the interpretation of
(pdf 264kb). The High Court Order remained in place.
ECJ preliminary ruling
The OFT welcomed landmark decision by the
the 18 October 2012 which held that aggressive practices which give the
consumer the impression that he has won a prize while he is invited to
pay a cost to claim it are prohibited absolutely.
The ECJ said that the concept of a true 'prize' should be preserved,
meaning that a prize in respect of which the consumer is obliged to make
a payment of whatever kind in order to claim it cannot be regarded as a
'prize'. Where people are told they have won a prize, this has a
psychological effect on them, meaning that they may be more willing to
call a premium rate number, travel to collect an item or pay delivery
costs for it. The court concluded that 'it is the very prospect of
taking possession of the prize which influences the consumer and may
cause him to take a decision he would not take otherwise, such as
choosing the quickest method of finding out what prize he has won, even
though that may be the most expensive method'.
The ECJ ruled that:
The ECJ's preliminary ruling ensures the uniform interpretation of the
Unfair Commercial Practices Directive (which the CPRs implement in the
UK) in all Member States.
Court of Appeal Order
Following the ECJ's ruling, the appeals were concluded by the making an
(pdf 982kb), by consent, and which was endorsed by the Court of
Appeal on 19 March 2013. The Order sets aside and replaces the High
Court Order and orders that the Appellants' appeal is dismissed and the
OFT's cross-appeal allowed.