Scratch Card companies taken to court by Office of Fair Trading

Scratch Card companies taken to court by Office of Fair TradingScratch Card companies taken to court by Office of Fair Trading

LONDON – The Office of Fair Trading (OFT) , the British Government’s market watchdog, is seeking court injunctions against five companies who sent out millions of scratchcards in newspapers and magazines.

The companies have mailed hundreds of thousands of prize draw letters and issued millions of scratch cards, which can be found in newspapers and magazines on a daily basis.

The OFT believes that the companies, including Purely Creative Ltd and Strike Lucky Games Ltd, have misled people all across the country with their promotions.

The court order issued by the OFT is also being sought against, “Adrian John Williams, a common director of all the companies, and Wendy Elaine Ruck, the common secretary, as well as Catherine Cummings a second director of Purely Creative Limited, and Peter Jude Henry, a previous director of The Winners Club Limited.”

According the the OFT website, the promotions that are issued by the companies in question are “legally unfair” because they :

* create the impression that the recipient has won a prize, which in fact cannot be claimed without incurring a cost, such as through a premium line telephone call or a payment for ‘insurance and delivery’. The typical premium rate call would cost £1.50 per minute

* deceive consumers into believing they have been particularly fortunate to have been selected or to have won a prize

* deceive consumers that a prize is of a high value.  In fact, more often than not, it was a prize of a minute monetary value that the “winner” paid over the odds for.

* omit information, or provide ambiguous information, about the chances of winning, costs of claiming, and terms and conditions of the prize draw.

Heather Clayton, Senior Director of the OFT said in a press release, “Our case is that these promotions encourage people to believe they have won a valuable prize when, we argue, the plain fact of the matter is that people are being sold a low value product. We have been unable to reach agreement with the companies or secure voluntary agreement that distribution will cease. So we think the best thing now is for the High Court to decide the matter.”

Purely Creative, which issues its scratch cards through newspapers and magazines, on its website claims that it has paid out nearly £6.5 million in prizes since January 2008.

The website also states that, for over 23 years, Purely Creative has been devising and operating a wide variety of imaginative and exciting prize competitions, carried by all the leading newspapers and magazines in the UK and Ireland.

According toJason Freeman, legal director at the OFT, “It costs these companies about 59p to print these vouchers and scratchcards. Then when people ring up they end up paying £9 just for a phone call to find out what they have won. They encourage people to believe they have won a valuable prize when the reality is they could end up with a watch that has only cost £1.50 to make. Then they are asked to fork out another £8.50 to have it delivered, so they end up paying more than the watch it worth. It’s very misleading to the consumer.”

Kevin de Hann QC, who is defending the accused, said simply, “Around 40 per cent of my clients business depends on repeat business. It isn’t in their interest to to have dissatisfied customers.”

Published: January 20, 2011

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