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Case detail



Directive article Article 5 1.
Article 6 1.
Article 7 1.
Annex I al2 31. -
National ID [2011] EWHC 106 (Ch)
Country United Kingdom Decision date 02/02/2011
Common name OFT v Purely Creative Ltd Decision type Court decision, first degree
Court High Court of Justice, Chancery Division Companies Court (London) Plaintiff(s) The Office of Fair Trading
Court translation High Court of Justice, Chancery Division Companies Court (London) Defendant(s) Purely Creative Limited, Strike Lucky Games Limited, The Winners Club Limited, Mcintyre & Dodd Marketing Limited, Dodd Marketing Limited, Adrian Williams, Wendy Ruck, Catherine Cummings and Peter Henry.
Subject prizes
Keywords average consumerblack listmaterial informationmisleading advertisingprizestransactional decision

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Headnote

(1) The principle of requiring a consumer to spend money in order to claim their prize, is not a breach of paragraph 31 of the Annex to the UCP Directive as long as the cost is minimal in comparison to the value of the prize and this is fully and fairly disclosed.

(2) The false impression that a prize is won can be created also without using the words "win" or "prize" since not only the words used, but also the layout and get-up of a communication must be considered.
 
(3) The concept of the "average consumer" relates to consumers who take reasonable care of themselves, rather than the ignorant, careless or over-hasty. It cannot simply be assumed that the average consumer will read the small print of a promotion.
 
The notion "material information" is that which is necessary to enable the average consumer to take an informed transactional decision, not that which would merely assist or be relevant. 

Facts

The plaintiff is a general enforcer, empowered to apply for enforcement orders.

The first to fifth defendants were all associated companies in a group. Each of the first to fourth defendants was a promoter of prize draw competitions to consumers, and the first, third and fourth defendants were each responsible for one or more of five or more specified promotions carried out in 2008. The fifth defendant was the immediate parent company of the fourth defendant and, in addition, controlled the second defendant. The sixth to ninth defendants were officers of the various companies. 

The case concerned promotions that consist of the sending to consumers, in the form of personalised letters and of inserts in newspapers and magazines, of invitations to claim prizes, awards or rewards which were alleged to be misleading in a number of specified respects. It was alleged that the promotions created the false impression that the consumer had already won, or would win a prize when in fact they could only claim such a prize by taking action which required the consumer paying money or incurring a cost, such as calling or sending text messages to a 'claims hotline' charged at £1.50 per minute or text message, or sending a cheque which was claimed to be for insurance and postage. 

Legal issue

(1) Does Annex I, nr. 31 of the UCP Directive allow to charge consumers a small amount in order for them to claim their prize in a promotion that creates the impression that a consumer has already won a prize?

(2) Does Annex I, nr. 31 of the UCP Directive apply when it is not explicitly stated that the consumer has won a prize?

(3) How do the concepts of "average consumer", "transactional decision" and "material information" apply in the context of such promotion ? 

  

Decision

(1) It was held by the High Court that the principle of requiring a consumer to spend money in order to claim a prize, is not a breach of paragraph 31 of Annex I to the UCP Directive, as long as the cost was minimal in comparison to the value of the prize and it was fully and fairly disclosed in the document informing the consumer of their win.

(2) Next, the court ruled that a false impression that a prize is won could be created without using the words "win" or "prize", and in deciding whether a form of communication is misleading, not only the words used, but also its layout and get-up must be considered.
 
The court concluded that it was a breach of paragraph 31 as the "recommended" methods of claiming a prize involved a cost of an amount which falsified the impression that the consumer had won something rather than having bought it. 
 
(3) The decision of the court relied heavily on the concept of the "average consumer" and the concern was to protect consumers who took reasonable care of themselves, rather than the "ignorant, careless or over-hasty". It is held that it cannot simply be assumed that the average consumer would read the small print of a promotion; that decision raised fact-intensive issues as to the application of article 6 and 7 and their causation requirements, Verein gegen Unwesen in Handel v Adolf Darbo AG (C465/98) [2000] E.C.R. I-2297 considered.
 
The English law concept of inducement required only that a consumer be significantly influenced by a misrepresentation, rather than the misrepresentation being the sole cause of a "transactional decision". However, in European jurisprudence consumer protection was not intended to become so paternalistic as to constitute a barrier to the free movement of goods. The phrase "causes or is likely to cause" was equivalent to the English standard of the balance of probabilities, and the appropriate test was to ascertain the combined effect of all the misleading acts and omissions and then assess whether the consumer would nonetheless have decided as he did.
 
The court also construed the meaning of "material information" as being that which was necessary to enable the average consumer to take an informed transactional decision, not that which would merely assist or be relevant. 

  URL Decision Decision full text
EN http://www.oft.gov.uk/shared_oft/judgments/OFTvPCL-judgment.pdf

Result

The court considered the defendants' promotions in detail and concluded that they contravened the UCP Directive and the regulations. It concluded that an enforcement order should be made.

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