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OFT obtains enforcement order against prize draw promoter

100/07    12 July 2007

The OFT has obtained an Enforcement Order in the High Court against a prize draw promoter and its director.
 
The Order, which was made by consent, prohibits The Media Age Group Limited (MAG) and its director Lyndon Major from continuing to publish what the OFT considers to be misleading prize draw advertisements or promoting unlawful lotteries in the future.

MAG distributed nearly 48,000 mailings from an intended run of up to 500,000 mailings under the name 'UK Rewards Club'. The mailings claimed that, as part of the company's 'customer reward' program, the recipient had been allocated a reward with a value of at least £1,000, which included £3,000 cash, a laptop computer, or a '£1500 Retail Award'. In order to secure their prize, the recipient was advised to return their 'Priority Reward Release Form' by post together with a payment of £20. More than 2,100 people responded to the mailing.

The OFT considered that the mailings were misleading as their layout and presentation gave the impression that, as previous customers of MAG, recipients had won a major prize. In fact, the majority of recipients' details were provided by a specialist data supplier service, and nearly everyone who responded was awarded the 'Retail Award' consisting of a discount voucher booklet which was subject to significant restrictions on its use. In order to obtain £1,500 of discounts recipients would have to spend several thousands of pounds of their own money. The OFT also considered that the mailings constituted unlawful lotteries because, in order to receive their award, the recipient had to pay the £20 'insured delivery and processing charge', and prizes were distributed by chance.

MAG's director, Lyndon Major, had previously given undertakings to the OFT in November 2004 in relation to another prize draw mailing. The OFT took the view that he had breached those undertakings and, consequently, sought an Enforcement Order.

The Enforcement Order in the High Court was granted under the Enterprise Act 2002, and relates to compliance with the Control of Misleading Advertisements Regulations 1988 and the Lotteries and Amusements Act 1976. If a company or person breaches an Enforcement Order, they can be held in contempt of court and can be fined, imprisoned or have their assets seized.

Mike Haley, OFT Head of Consumer Protection, said:

'In our view these mailings misled recipients about the nature and status of the prize they were likely to receive. We will not hesitate to act against other promoters who mislead consumers in similar ways.'
 
Consumers who are unsure about claims being made in mailings should contact Consumer Direct for clear, practical advice on 08454 04 05 06 or visit the Consumer Direct website before they part with any money.

NOTES

1. The Enforcement Order, which was made by consent, was granted by the High Court on 8 June 2007.

2. The OFT has also obtained Enterprise Act undertakings in similar terms from The Media Age Group Ltd's company secretary, Jemma Major.

3. The registered office of The Media Age Group Limited is 51C Fore Street, Totnes, Devon TQ9 5NJ.

4. Part 8 of the Enterprise Act 2002 came into force on 20 June 2003. The Enterprise Act improves consumer protection by giving enforcers increased 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.

5. The Control of Misleading Advertisements Regulations (CMARs) 1988 largely implements EU Directives on misleading and comparative advertising. They aim to protect the interests of consumers and businesses from misleading advertisements and advertisements that make prohibited comparisons. The OFT's main role under the CMARs is to support and reinforce the existing advertising controls exercised by other bodies, not to replace them. The OFT will step in where it is in the public interest that an advertisement should be stopped and future misleading advertisements prevented by means of a court injunction against those concerned, or by the threat of it. To come within the scope of the CMARs, an advertisement must be 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 be 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.

6. The Lotteries and Amusements Act 1976 (LAA) provides that all lotteries and raffles (except where specifically authorised by the LAA or the National Lottery etc. Act 1993) are unlawful, and makes it an offence to be involved with their promotion.

7. Consumer Direct is a telephone and online consumer advice service funded by government and managed by the Office of Fair Trading. It offers clear, practical and impartial advice and information about consumer rights.

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