Unfair Trading Legislation Stops Bogus Prize Draws

Not many prosecutions are brought under the Consumer Protection from Unfair Trading Regulations 2008, which are designed to protect consumers from the activities of unscrupulous traders.

Recently, however, several companies were taken to court by the Office of Fair Trading for breaches of the Regulations.

One of the companies offered invitations to claim ‘prizes’ by sending unsolicited letters to people. The ‘prizes’ that were the subject of the prosecution were either an LCD TV, which was allocated to less than 1 per cent of the applicants, or a ‘Zurich watch’, which was allocated to more than 99 per cent of them. The Zurich watch actually contained a movement made in Japan.

To acquire the prize, it was necessary to obtain a ‘prize code’. This was done by the ‘prize’ recipient telephoning a premium-rate number – which cost £8.95. They then had to send a further £8.50 because the watch was an ‘electrical item’. The total cost to the consumer was therefore £17.45 and the supplier made a profit of approximately £7 on each ‘prize’.

The court concluded that there was, in reality, no prize and that the claimant had effectively bought the watch.

In each case, the OFT found that the Regulations had been breached and that the ‘prize’ element of the promotion was a sham.

There are many unscrupulous traders in the market and promotions that offer ‘free prizes’ are seldom genuine. There are also examples of companies that deliberately target vulnerable people (i.e. the recently bereaved).

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