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OFT stops misleading premium rate prize promotion

220/05    29 November 2005

A Chester-based company has been stopped from publishing misleading advertisements for premium rate prize promotions, following action taken by the OFT.

Phoenix Media (UK) Limited, trading as Techtron Games, distributed over 1.7 million promotional envelopes for a premium rate prize competition. The envelopes, which were enclosed in various national publications, told consumers that they could have won a 'life-changing prize' if they had a winning prize code. Consumers were urged to act quickly to claim their prize by calling a premium rate number. Calls were charged at £1.50 per minute, and lasted for up to seven and a half minutes. The total cost of each call was up to £11.25. Over 16,700 people called the premium rate numbers used in the promotion.   

The OFT considered that the envelopes were misleading as their layout and presentation gave the impression that the recipient had won a major cash prize of £25,000. In fact, nearly everyone who responded received the 'giveaway' item of a holiday cruise voucher, which was subject to significant restrictions on its use and was misleadingly described in the promotion as a 'Caribbean Cruise'. The OFT further considered that the envelopes gave the misleading impression that the cruise voucher was a major prize and that recipients had been particularly fortunate, in relation to other recipients, to have won a prize when in fact everyone was a 'winner'.  

Phoenix Media (UK) Limited and its officers, Gillian and Steven Christie, provided the OFT with binding undertakings, under Part 8 of the Enterprise Act 2002, in relation to what the OFT considered were contraventions of the Control of Misleading Advertisements Regulations 1988 and the Business Names Act 1985. If the undertakings are breached the OFT could seek a court injunction. Failure to obey a court injunction could result in proceedings for contempt of court. An undertaking is in itself not an admission of a previous infringement, but is intended to regulate future conduct.

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

This is the latest enforcement action taken by the OFT against deceptive premium rate prize promotions (see note 5)

John Fingleton, OFT Chief Executive, said:

'These advertisements were highly misleading and encouraged consumers to make expensive phone calls in the hope of receiving a major cash prize. The OFT will continue to crack down on advertisers who make misleading claims which harm consumers' interests and discredit legitimate marketing techniques'.

NOTES

1. All of the undertakings were signed on 28 October 2005.

2. The registered office of Phoenix Media (UK) Limited is The Steam Mill, Steam Mill Street, Chester CH3 5AN.

3. Part 8 of the Enterprise Act 2002 came into force on 20 June 2003. The Enterprise Act improves consumer protection by giving OFT and other 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. 

4. Using its powers under Part 8 of the Enterprise Act, the OFT has been working in partnership with local Trading Standards Services, ICSTIS, the premuim rate regulator, and the Advertising Standards Authority to target the companies and individuals behind deceptive premium rate prize promotions. See press releases 122/05, 90/05, 55/05 and 2/05 for details of other OFT enforcement actions in this area. 

5. The OFT has also taken enforcement action to tackle scams directed at UK consumers, often with the co-operation of other enforcement agencies in the UK and abroad. Tackling mass-marketed scams is a priority area for the OFT over the next 3 years. The OFT has set up a specialist team to target the most prevalent scams with the aim of reducing the harm suffered by consumers and increasing consumer confidence in legitimate mass marketing to the benefits of all fair trading businesses. 

6. 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.

7. The Business Names Act 1985 requires businesses which trade under a name other than the proprietor's true name to prominently display the names and addresses of the proprietor or proprietors at business premises, to clearly state them on business stationery and documentation and to provide them in writing to any person dealing with the business who asks for them.

8. ICSTIS is the industry-funded regulatory body for all premium rate charged telecommunications services. ICSTIS regulates the content, promotion and overall operation of services through its Code of Practice.

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