ECJ Ruling on aggressive practice of making consumers pay for prizes under the Unfair Commercial Practices Directive

The case of Purely Creative and others v Office of Fair Trading was recently referred to the European Court of Justice (ECJ) where a ruling on the aggressive practice of making consumers pay for prizes was made under the Unfair Commercial Practices Directive (UCPD).

The UCPD prohibits unfair commercial practices by traders under two broad categories of unfair practice: a practice which is misleading and an aggressive practice.  Paragraph 31 of Annex 1 provides that the following practice is always to be considered as unfair: “creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either: there is no prize or other equivalent benefit; or taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.”

Facts of the Case

The parties in this matter, Purely Creative and others, promoted various types of scratch-card prize-draws, distributed by either direct mail or as inserts in newspapers and magazines.  Consumers were told they could claim one of various prizes but the Consumer would have to contact the promoter to find out what the prize was and to obtain a claim number and gave options of premium rate telephone numbers, reverse SMS services or by obtaining the information by post, though no minimum time of call duration or promoter profit was given.  In certain cases, consumers even had to pay additional costs such as insurance and delivery of the prize they had won.

High Court Decision

The Office of Fair Trading (OFT) sought enforcement orders in the High Court to stop the promotions.  The High Court held that the promotions did in fact breach regulations 5, 6 and paragraph 31 of the Civil Procedure Rules and thus enforcement orders should be granted.

Court of Appeal

On appeal the promoters argued that the High Court had erred on its view of the costs involved in claiming a prize under paragraph 31.  The OFT cross-appealed and asked that the undertakings be modified to either exclude any cost falling on the consumer or if a cost did fall on the consumer then it could only be de minimis (i.e. of minimal cost).  The Court of Appeal stayed proceedings and referred various questions to the ECJ.

The ECJ Decision

It was held that where a consumer is led to believe he has won, or will win, a prize, a promoter cannot make the consumer pay any costs whatsoever, either to request information about a prize or to take possession of one.  This ban on costs is absolute and extends even to the cost of a postage stamp.