The CJEU recently clarified that the practice of informing a customer he has won a prize, and obliging him to incur costs to receive that prize, is prohibited.
The Unfair Commercial Practices Directive (2005)/29/EC) (transposed in Ireland by the Consumer Protection Act 2007) contains a blacklist of commercial practices which are regarded as unfair and prohibited in all circumstances. This case concerned paragraph 31 of Annex 1 of the Directive, which prohibits a trader from giving the false impression that a consumer has already won a prize, when the consumer is required to take action in order to claim the prize, and make a payment or incur costs. The CJEU has clarified that it is irrelevant that the cost imposed on the consumer, such as the cost of a stamp, is de minimis compared to the value of the prize, or that it does not procure the trader any benefit. It is also irrelevant that the trader offers the consumer a number of methods by which he may claim the prize, at least one of which is free of charge.
The reference to the CJEU arose out of a dispute between the UK’s Office of Fair Trading (OFT) and traders. The OFT had brought proceedings in the UK seeking to restrain the traders from continuing to distribute certain promotions which were allegedly prohibited as ‘unfair commercial practices’ under the Directive. The promotions included individually addressed letters, and scratch-cards which were inserted into newspapers and magazines. The promotions informed the customer that he was entitled to claim a prize, ranging from a prize of considerable value to a prize worth a few pounds. It was not disputed that the prizes were genuinely available to the consumers concerned. In order to find out what a consumer was entitled to claim, and to be given a claim number, the consumer was given the option of: (a) calling a premium rate telephone number, or (b) using a reverse SMS telephone messaging service, or (c) obtaining the information by ordinary post. Consumers were encouraged to use a more expensive route than the postal route.
As paragraph 31 has not previously been the subject of any judgment in any Member State, this judgment provides welcome clarification on the correct interpretation of the scope of the banned commercial practice. It shows that if a consumer has been informed that he has won a prize, there is an absolute prohibition on imposing any cost on him/her in order to claim his prize.
The CJEU held that it is for the national courts to assess the information provided to consumers taking into account whether that information is clear and can be understood by the public targeted by the practice.