In the current economic climate, organisations are turning towards promotional marketing as a tool to generate interest with consumers. The majority of these promotions involve incentives such as holidays, cars and other prizes in an attempt to increase the profile and ultimate sales of the product. However, in Ireland, advertising and promotional marketing practices are heavily regulated. It is essential that businesses have regard to the legislation and to ensure compliance with it to avoid civil and criminal sanctions.
What is the legal Framework?
The Consumer Protection Act, 2007 (the “2007 Act”) provides protection for consumers in relation to information either omitted or provided by advertisers which is “likely to cause the average consumer to make a transactional decision that the average consumer would not otherwise make”1. The main test is that a promotion does not mislead consumers.
In addition, the Advertising Standards Authority of Ireland (“ASAI”) has been set up to act as a self-regulatory body within the advertising industry and has proved to be extremely effective. The ASAI has its own code of conduct (the “Code”) and advertisers must adhere to this.
The Code supplements the 2007 Act’s requirement that commercial practices do not mislead the average consumer. The ASAI has recognised the value of temporary promotional competitions and has a section dedicated to Promotional Marketing Practices. This provides clarity on which practices are acceptable and which practices are unacceptable.
The definition of a promotional practice in the Code is one providing a direct or indirect benefit, usually on a temporary basis, designed to make goods or services more attractive to purchasers. These must, according to the Code, be fair and honourable to consumers. Any compromise on quality2 or availability3 will be deemed a contravention of the Code. The Code states that the presentation of the product must not overstate its value and quality4, and it must not mislead the consumer5. The terms of the promotion should be clear and easy for the consumer to understand6. The emphasis on transparency ensures that the average consumer cannot be bombarded with business jargon which would be likely to confuse.
The Code also provides for complete transparency in relation to ‘Free Offers’ so that the offer is completely and not subject to hidden charges, and ‘Charity-linked Promotions’ to ensure that an officially registered charity will obtain a certain benefit on foot of the promotion.
When running prize draws it is also essential to have regard to the Gaming and Lotteries Acts 1958-2003 which prohibit gaming or the operation of a lottery without a licence. Any game or promotion where skill is not required and where a payment is made, could be classed as a lottery under the Gaming and Lotteries Acts. Some advertising type promotions have been found by the Courts to constitute lotteries in the legal sense and found to be in contradiction of the Gaming and Lotteries Acts. There are legal ways to manage this legislative framework and it is important to consider this issue before a promotion is rolled out.
The 2007 Act, the ASAI Code of Conduct and Gaming and Lotteries Legislation must be considered by businesses advertising their services before commencing any advertising or promotional campaign. The sanctions for non-compliance include civil and criminal penalties and the withdrawal of the advertising campaign from all media. This can be an expensive mistake – you have been warned!