Wednesday, 2 February 2011

Court rules prize draw promotions are against the law

A High Court judge has ruled that certain promotions using prize draws are in breach of the law. Five companies have been told that they face enforcement orders.

The judge, Mr Justice Briggs, found that the infringements had occurred on a large scale and very large numbers of consumers had been sent the promotions.

Around 11.5 million promotions were sent out in one year. 200,000 consumers responded, mainly through premium rate phone calls or premium rate text messages

Typically, 'winners' would have to pay out costs amounting to more than the value of the prize. The price of calls and administration might be around £15. The prize, an MP3 player for instance, would only have cost the promoter £9.

In one example from 2008, letters were sent to nearly 1.5 million consumers telling them they had won one of a list of prizes, including £25,000 in cash. But 99.92% of recipients were allocated cheap electrical goods. They were encouraged to phone a premium rate line to claim the prize. Then they had to pay £8.50 for insurance and delivery.

In another one, 9 million strips of scratchcards were inserted in newspapers, offering Top Treats or a big jackpot as prizes. 99.9% of the winners won £10, a Greek cruise voucher, worth 59p or as the judge said "of dubious value".

The winners were encouraged to spend at least £8.43 on a premium rate call to learn about the prizes.

The case was brought by the Office of Fair Trading after it tried unsuccessfully to secure a voluntary agreement from the companies to stop distributing the promotions.

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