Newsroom

OFT stops misleading premium rate prize promotions

105/06    28 June 2006

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

Sure to Win Limited, trading as The Prize Bank Consortium, distributed more than 1.1million mailings that gave the impression the recipient had won £10,000. Recipients were urged to act quickly to claim their prize by calling a premium rate number or using a fast text premium rate service. In fact, nearly everyone who responded was only entitled to claim a 'giveaway' prize of a cheap 'diamond pendant'.

Almost 204,000 calls were made to the premium rate number at a cost of £1.50 per minute. With the average call lasting almost seven minutes, the total cost to some callers was more than £10. Furthermore, 30,000 text messages were sent to a reverse billed premium rate service at a cost of £7.50 each. Participants also had to pay an additional 'packing and damage waiver charge' of either £3.95 or £6.95 to claim their prize, but this was hidden in a large amount of small print on the back of the mailing.

The OFT considered that the mailings were misleading as their layout and presentation gave the impression that the recipient had won £10,000. The OFT also took the view that a number of other Prize Bank Consortium mailings were misleading as they gave the impression that recipients had won major prizes when in fact they were only entitled to claim low value 'giveaway' items.

The OFT has obtained binding undertakings under Part 8 of the Enterprise Act 2002 from Sure to Win Limited, its officers Charles Bloom and Richard Scott and controller Malcolm Hellewell in relation to contraventions of the Control of Misleading Advertisements Regulations 1988. If the undertakings are breached, the OFT can seek a court injunction. Failure to obey a court injunction may result in proceedings for contempt of court.

This is the latest enforcement action taken by the OFT against such promotions.

Christine Wade, OFT Director of Consumer Regulation Enforcement, said:

'These advertisements were very misleading and encouraged consumers to call a premium rate number in the belief that they would receive a £10,000 cash prize. The OFT will continue to crack down on promotions that make misleading claims.'

NOTES

1. Sure to Win Limited and its officers and controllers signed undertakings on 31 May 2006 and 1 June 2006.

2. The business address of Sure to Win Limited is Grosvenor House, 27 School Lane, Bushey, Herts WD23 1SY. The registered office address is Sanderson House, Horsforth, Leeds LS18 5NT.

3. Part 8 of the Enterprise Act 2002 came into force on 20 June 2003. The Enterprise Act improves consumer protection by giving the OFT and other enforcers strengthened powers to obtain court orders against traders that breach a range of consumer legislation in the course of activities involving, for example, misleading advertising, misleading price indications, lotteries, sales 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 premium rate services regulator, and the Advertising Standards Authority to target the companies and individuals behind deceptive premium rate prize promotions. See press releases 41/06, 122/05, 90/05, 55/05 and 2/05 for details of other OFT enforcement actions in this area.

5. The OFT has set up a specialist team to target the most prevalent mass-marketed scams with the aim of reducing the harm suffered by consumers.

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. 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.

8. The Advertising Standards Authority is the self-regulatory body for advertising in the UK. It administers Codes for both broadcast and non-broadcast advertising.

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