‘Pay to claim your prize’ promotions outlawed

The EU’s highest court has ruled that promotions which give a false impression that consumers have won a prize, but for which they have to pay money to claim it, are illegal.

The ruling by the European Court of Justice means that such promotions, which frequently take the form of inserts and scratch cards in newspapers and magazines, are prohibited.

Many consumers also receive similar notices in the post informing the “lucky” recipient that they have won a prize. However, such promotions stipulate that the winner must either call a premium rate number, send a text message, or apply by post to claim it. In some cases, the winner also has to pay delivery and insurance costs.

The ECJ yesterday ruled on a case referred by the British courts as a result of proceedings brought by the UK Office of Fair Trading against five English-based promotions companies.

The UK watchdog sought to restrain the traders from continuing to distribute such promotions on the basis that they contravened EU legislation on misleading advertising.

The ECJ noted that as a general rule more than 99% of so-called winners received the most common prize, the value of which is less than any amount they have to pay to claim it.

For example, the prize of a Swiss match, which was actually made in Japan, cost the promoter £9.36 (€11.50), although winners would have to pay between £9.50 and £20 to claim it.

The ECJ heard that another promotion offered winners the prize of a Mediterranean cruise for four. However, consumers had to pay, among other costs, insurance, a supplement to obtain a one or two-bed cabin, the cost of food and drink on the voyage, and port fees. As a result, two couples would have to pay £1,596 (€1,965) or £399 (€491) per person to avail of the cruise.

The court was informed that more than 356,000 had “won” such a prize of a three-day cruise.

The promotion firms argued unsuccessfully that they used to keep up-to-date databases of participants likely to be interested in being offered other relevant products.

In its ruling yesterday, the ECJ said such practices were prohibited under EU law.