Newsroom

Irish company stops running premium rate prize promotions

125/06    18 August 2006

A company based in Ireland and its officers have given assurances to the OFT that they will no longer be involved in the running of premium rate prize promotions that the OFT considers to be misleading.

Promocom Ireland Limited traded under the names of the Value Group, Bradshaw Games, Anderson Games and TGS. The company distributed large numbers of prize mailings and scratchcards to UK consumers informing them that they were entitled to claim one of the awards shown and urging them to claim by calling a premium rate number at a cost of £1.50 per minute. Calls lasted for several minutes and, in the case of one of the promotions which gave four separate premium rate numbers to claim four separate prizes, could cost consumers up to £42 to find out what prizes they had won.

Following complaints from consumers, the OFT raised concerns with Promocom about what it believed to be the misleading nature of the promotions. The OFT took the view that the promotions were misleading as they gave the impression that every recipient had won a major prize. Whilst a few participants did receive a major prize, nearly everyone who responded won low value 'giveaway' prizes such as discount voucher booklets. In particular, the OFT considered that each of the promotions misled recipients in some, or all, of the following ways by:

• giving the impression that every recipient had won a substantial cash prize, or another major prize such as a dream home when this was, in fact, not the case
• failing to provide a full and accurate description of the prizes that were available, and
• failing to adequately draw recipients' attention to important information regarding the number of each of the prizes that were available, and other significant terms and conditions that were applicable to some of the 'giveaway' prizes.

The company and its officers, Gavin McConnon and Iain McConnon, also informed the OFT that, partly as a result of the OFT's concerns, they had taken a commercial decision to stop all premium rate scratchcard and competition promotions and have no intention of running these promotions again, or of being involved in the running of any such promotions which are misleading. The assurances provided to the OFT do not constitute any admission by the company or its officers that their promotions breached legislation implementing the Misleading Advertising Directive.

The OFT worked closely with ICSTIS, Trading Standards Services and the Advertising Standards Authority during its investigation.

If the company or its officers were to again publish what the OFT considers to be misleading prize draw advertisements, the OFT could seek a court injunction before the relevant Irish court to ensure compliance with European consumer protection legislation.

Colin Brown, OFT Director Market Transformations, said:

'We considered these promotions, which encouraged consumers to call a premium rate number in the hope of receiving a large cash award or other major prize, to be misleading. The OFT will not hesitate to use its cross border enforcement powers to stop consumers being misled by European-based businesses.'

NOTES

1. The registered office of Promocom Ireland Limited (company registration number 364826) is 17 Block 7, Clarion Quay, IFSC, Dublin 1, Ireland.

2. ICSTIS adjudicated in relation to the Value Group promotion in May 2005. ICSTIS fined the two service providers involved, BCH Digital of Manchester and Prime Media Services of Ireland (who were responsible for the premium rate numbers used), £20,000.

3. Part 8 of the Enterprise Act 2002 gives effect to the Injunctions Directive in the UK and empowers the OFT, other general enforcers and designated enforcers which are public bodies, to take action against businesses in other European Economic Area countries that are infringing certain European-based consumer protection legislation. When a business based in another EU country harms the collective interests of UK consumers, the OFT will normally ask the relevant community enforcer to take enforcement action. However, the OFT is able to take action in other EU member states if no community enforcer can act. 

4. Council Directive 84/450/EEC on Misleading Advertising provides protection against misleading and unacceptable comparative advertisements. Under the Injunctions Directive 98/27 the OFT is empowered to apply to another member state's courts for an injunction to end an infringement such as a continued publication of misleading advertisements in the UK. Under the Misleading Advertising Directive an advertisement is misleading if it 'in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor'.

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