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Prize 'giveaway' agrees to stop misleading mailings

2/05    6 January 2005

Prize giveaway promoter Purple Rock Solutions Ltd (PRS) has given undertakings that it will not publish misleading mailings following action by the OFT.

PRS sent letters to people under its Purple Rock Giveaway promotion. These letters gave the impression that recipients had won a competition and stated that their 'entry into Purple Rock Giveaway has been successful' and that they 'have definitely been selected' to receive one of nine main prizes, including a BMW mini, Flat Screen TV and a digital camera.

To claim their 'prize' the 'winners' were referred to a 24 hour claim line. Only the small print of the letter explained the cost of the telephone call (£1.50/min with calls lasting up to six minutes) and the handling and delivery charge of £14.95, which consumers would have to pay for most prizes.

The majority of people who responded to the mailing had not won a valuable prize as they were led to expect but were in fact sent a voucher for an inexpensive 'mini' digital camera. To receive this camera the voucher had to be sent back to PRS with the £14.95 handling and delivery charge. People complained that they did not receive the camera pictured on the mailing, which was of a much higher specification than the mini digital camera sent out by PRS.

Those who complained had no knowledge of ever having entered the 'competition'. Their details had been obtained from a database bought by PRS. PRS sent mailings to 2.1 million people, of whom 137,000 contacted the PRS premium rate call line.

The OFT began investigating PRS following a number of consumer complaints. The OFT sought undertakings from PRS and its officers, Matthew and Charlotte Bright, under the Enterprise Act on the grounds that the mailings were misleading and breached the Control of Misleading Advertisements Regulations.

They have undertaken, amongst other things, that they will not publish materials giving a misleading impression that:

• recipients have previously entered one of the promoter's promotions
• recipients are competition winners when the majority of participants qualify to receive an item
• each item listed in the promotion is a major prize and they are all of equal status when that is not the case
• a particular item is of a higher specification than is the case.

They have also undertaken that in future they will not act in connection with the promotion of a lottery in breach of the Lotteries and Amusements Act 1976 (see note 3).

The OFT worked closely with trading standards, ICSTIS and the Advertising Standards Authority in collecting evidence for this case.

Sir John Vickers, OFT Chairman, said:

'The scheme was highly misleading. People were led to believe they had won a top prize when in fact they were being induced to pay for a low value product. The OFT will not hesitate to take action to stop this type of misleading scheme.'

NOTES

1. The promotion ceased after ICSTIS fined PRS £10,000 in July 2004 and barred them from access to phone numbers used in this promotion for 12 months.  The OFT took its action in order to deal with the future conduct of those involved.

2. Part 8 of the Enterprise Act 2002 came into force on 20 June 2003. The Enterprise Act improves consumer protection by giving enforcers strengthened powers to obtain court orders against traders that breach a range of consumer legislation; controlling activities such as misleading advertising, misleading price indications, lotteries, sale of goods and services, underage sales, estate agency, misleading health claims, trade descriptions, mock auctions, timeshare, unfair terms in consumer contracts, doorstep selling, distance selling, package travel and consumer credit. 

3. Lotteries and Amusements Act 1976 (LAA) provides that all lotteries and raffles, except as authorised by the LAA or the National Lottery etc. Act 1993 are unlawful and involvement in any such lottery in any of a number of specified ways is prohibited. The LAA authorises small lotteries incidental to exempt entertainments, private lotteries, lotteries of certain registered societies and local authority promoted lotteries which in each case satisfy the conditions prescribed by the LAA. The undertakings given in this case deal with potential breaches of section 2(1) of the LAA.

4. The Control of Misleading Advertisements Regulations 1988 (CMARs) came into force on 20 June 1988 implementing an EC Directive on misleading advertising. The OFT's powers under the CMARs are triggered if an advertisement is misleading (i.e. it must deceive or be likely to deceive the recipient and affect their economic behaviour, or for those reasons, harm the interests of a competitor), and is published in connection with a trade, business, craft or profession, in order to promote the supply or transfer of goods or services, immovable property, rights or obligations. The OFT can take action against anyone appearing to be concerned or likely to be concerned with the publication of a misleading advertisement.

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