Unfair Trading Legislation Stops Bogus Prize Draws
Posted: 12th May 2011
Not many prosecutions are brought under the Consumer Protection From Unfair Trading Regulations 2008, which are designed to protect consumers form the activities of unscrupulous traders.
Recently 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’ which were the subject of the prosecution were either an LCD TV (allocated to less than 1 per cent of the applicants) or a ‘Zurich watch’ which was allocated to more than 99 per cent of the respondents. The Zurich watch actually contained a movement made in Japan.
To obtain 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: the claimant had 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 target vulnerable people (i.e. the recently bereaved).
If something looks too good to be true, it is almost certainly because it is. Do not commit yourself without thinking through your options.