Complainant: Office of Fair Trading (OFT) (own-initiative
Case Reference: CRE-E/18299
Investigation into: Agence de Marketing Appliqué trading as Vital Beauty and Swiss Home
Shopping, Company registration number: 0866.619.675, with a registered
office address at Europole, 1 Dreve Gustave Fache, 7700 Mouscron,
UK consumers were receiving unsolicited prize draw mailings under the
names 'Vital Beauty' and 'Swiss Home Shopping'. The OFT were
concerned that the mailings were misleading in that they appeared to
notify consumers of a major prize win and linked claiming the 'prize'
to the making of a purchase from an enclosed catalogue which offered
household goods and health remedies. In fact the small print revealed
that recipients were merely being invited to participate in a prize draw
with a very small chance of winning the major prize.
Directive 2005/29/EC on Unfair Commercial Practices and the Consumer
Protection from Unfair Trading Regulations 2008.
In September 2007 the OFT obtained a signed undertaking from Agence de
Marketing Appliqué (AMA), a Belgian mail order company trading under the
names 'Vital Beauty' and 'Swiss Home Shopping', that it would not
continue to publish misleading prize draw mailings and would make
various changes to its future mailings. For further details see press
release OFT obtains undertakings from Belgian mail order
was issued at that time.
However, following the undertaking, the OFT received further consumer
complaints regarding AMA's mailings and the OFT concluded that these
mailings were still misleading. As such, in September 2008 the OFT made
a referral against AMA to our Belgian counterparts, the
Directorate-General Enforcement and Mediation ('DGEM') of the Federal
Public Service for Economy, SMEs, Self-Employed and Energy, under the EU
Consumer Protection Co-operation Regulation ('CPC Regulation').
The OFT considered Vital Beauty and Swiss Home Shopping mailings to be
misleading and in breach of the EU Unfair Commercial Practices Directive
2005/29/EC ('UCPD'). In particular, the OFT considered these mailings
to be misleading as they appeared to notify UK consumers of a major
prize win and linked claiming the prize, or receiving it more quickly,
to the making of a payment when in fact no purchase was necessary.
The CPC Regulation established a network of public enforcement agencies
in every EU member state to facilitate effective cross-border
co-operation on infringements of consumer law. The aim of the CPC
Regulation is to provide a formal mechanism which allows designated
enforcement bodies to refer cases to their European counterparts for
appropriate action. Under the CPC Regulation all member states have a
duty to consider taking action to protect the collective interests of
consumers when they are requested to do so.
Belgian Commercial Court hearing
An interim injunction procedure was filed by the DGEM on 14 June 2010
before the Presiding judge of the Tournai District Commercial Court and
the full hearing took place on 16 February 2011. The Presiding judge
that AMA's advertising disseminated in both Britain and France
under the brand names Vital Beauty and Swiss Home Shopping were illegal
and in breach of the law (namely articles 5, 6 and 7 and practices 19
and 31 of Annex I of the UCPD) for the following reason:
- they give recipients the false impression that the recipient is the
winner of the first prize in a lottery, or a large sum, and that
placing an order in the accompanying catalogue is mandatory or is
likely to speed up the process of receiving the prize when in fact the
prize won is merely a discount voucher to be redeemed exclusively on
purchases of AMA's products. This is unfair and misleading because it
obliges consumers to spend money to obtain information on whether they
have definitely won the amount and in so far as AMA refrains from
awarding the prizes described or a reasonable equivalent whilst
claiming to offer a competition.
The ruling prevented AMA from continuing to send misleading mailings
under the names of Vital Beauty and Swiss Home Shopping to UK and French
consumers. Failure to comply with the injunction would result in a
€2,500 fine for each offending mailing sent, to a maximum of one million
euros. AMA were also required to place a summary of the judgment in two
national British and French newspapers.
Mons Court of Appeal- First Chamber hearing
AMA appealed this decision on 30 March 2011 and the appeal was heard by
the Mons Court of Appeal. The Mons Court of Appeal
in which it allowed AMA's appeal and set aside the original
order. However it ruled that AMA's mailings were illegal under
regulations 5 and 6 of the Consumer Protection from Unfair Trading
Regulations 2008 and article L.121-1 of the French Consumer Code as they
were likely to give the misleading impression that:
- the recipient of the mailing is the winner of the first prize, which
is a large sum, in the lottery that it organises, when in fact there
is only one chance out of the number of pre-drawn numbers that the
recipient is the winner
- placing an order is likely to have a positive influence over the
process of paying out the first prize.
The Court of Appeal ordered the cessation of these practices within
three months of the ruling, and ordered the payment of a reduced penalty
of €100 for each offending mailing sent in breach of the judgment, to a
maximum of one million euros. The judgment came into force on 14
February 2012. AMA have lodged an appeal but the judgment remains in
force whilst the appeal process progresses. AMA have advised the DGEM
that they have ceased sending the mailings to the UK and France.