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ISP Legal News: New rules emerge on prize promotions

The Legal Advisory Service is issuing new guidance on the Consumer Protection from Unfair Trading Regulations, which came into operation on 26th May.

Within the Regulations, there is a list of commercial practices which are in all circumstances considered unfair.  This is sometimes called the black list. 

The last of these practices includes a ban on the situation where taking any action in relation to claiming a prize is subject to the consumer paying money or incurring a cost. 

The ISP now understands from very recent discussions with the Office of Fair Trading that the OFT are taking a very strict line and saying that it is contrary to the Regulations to even require people to spend money on postage, for example to send in a winning scratchcard. 

They are saying that there must be no cost whatsoever in the process of claiming a prize and this includes the cost of postage to send in a winning scratchcard.

Accordingly, our advice to the industry is that there must be no charge or cost whatsoever for winners in claiming prizes.  There either needs to be a Freepost facility or else a facility whereby the cost of postage can be reimbursed. 

We still recommend promoters saying in their terms and conditions that recorded delivery should be used by winners to send in their claim – for example, where a winning scratchcard is involved – but the cost of this must be borne by the promoter.

Although the Regulations do not provide for a formal lead-in period, we understand that there is unlikely to be any enforcement action in respect of material which was in preparation before the regulations came into operation on 26th May.  We recommend, however, that this matter is addressed in respect of new promotional material prepared after 26th May.

For earlier guidance on the Regulations and their impact on the use of the word “free” in promotions, visit www.isp.org.uk