One of the banned practices under the Consumer Protection from Unfair Trading Regulations 2008 is item 31:
“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:
1. there is no prize or other equivalent benefit, or
2. taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.”
As reported in our March 2011 bulletin, the English High Court decided there is no breach of item 31 if the cost incurred by the consumer is clearly identified and minimal, such as the cost of a postage stamp or an ordinary telephone call, if no part of the cost reaches the trader’s pocket, and the cost is de minimis compared to the value of the prize.
The Court of Appeal referred a number of questions to the European Court of Justice.
The ECJ has ruled that the English court got this aspect of its judgment wrong. The ECJ took a very black and white view of item 31. The consumer must not be required to incur any cost whatsoever, even the cost of a stamp. Nor is it legal to offer consumers a number of methods to claim their prize, if any one or more of those methods involves incurring a cost, even if an alternative free method is offered.
The ECJ’s judgment is remarkably clear and seems somewhat rigid at first sight, but the reality of many promotions of this nature, where consumers are told they have “already won”, is that they are simply money making ploys which take advantage of people, not marketing promotions offering something of genuine value to promote a company’s goods or services. As the High Court put it, what’s on offer are purchases dressed up as prizes.