It’s National Consumer Week, and we’ve teamed up with the National Trading Standards Scams Team (NTS Scams Team) to raise awareness about unfair and misleading prize draw mailings. As part of that, we’re warning consumers about bogus companies who target often vulnerable people, leaving them out of pocket and empty handed, and how to avoid falling for this type of scam.
While there is a legitimate market for promotional mailings, and the majority are run responsibly and within the law, there are some companies who don’t treat consumers fairly. Instead, they use misleading tactics to make an illegitimate profit. The scale of the problem is demonstrated by the NTS Scams Team’s figures. It estimates that every year 3.2 million consumers are misled into spending money by these companies, which amounts to a staggering £5-10 billion being lost to misleading direct mailings on an annual basis.
These companies, many of which are based abroad, target vulnerable members of society with letters that look as though the recipient has won a prize. On closer inspection, it turns out that the mailings are really promoting a prize draw, which could be entered for free. Moreover, a purchase is only required to obtain a ‘cash reward’ or ‘free gift’ – usually worth less than what was paid for the order.
Typical complaints we receive are that:
- Mailings imply a recipient has already won a prize when that’s not the case
- Mailings exaggerate the value of the rewards consumers will receive
- The distinction between gifts and prizes is not clear enough
- Mailings confuse the route to enter a prize draw with the route of claiming a gift or reward
- The terms and conditions of the promotion are unclear
We’re responsible for ensuring sales promotions and prize draws stick to the rules. CAP provides advice to promoters to help them comply with the rules.
As a quick guide, prize promotions should follow these guidelines:
- Consumers cannot incur a cost to claim a prize or equivalent benefit.
- Promotions must not imply consumers have won if they have not, or overstate the chance of winning. They must clearly differentiate between ‘gifts’ and ‘prizes’, and avoid describing them under an umbrella term (such as ‘awards’), because this is likely to cause confusion.
- The design, layout or format of the promotion should not be misleading. Using larger font, emboldened text of formatting can unduly emphasise phrases or parts of sentences in a way that encourages consumers to read claims out of context, creating a misleading overall impression.
- Fake cheques, or similar, used to give consumers an indication of what they could win, should not be presented as real.
- Consumers should not be encouraged to interact with the promotional material if it is likely to confuse them into thinking they have won a prize if they have not. This includes matching unique numbers with winning numbers, or checking for winning symbols.
- Promotions sent by direct mail should not mislead about content of envelopes, for example, by stating or implying that they come from an official source or contain private information if they do not. In isolation, claims such as ‘private and confidential’ and ‘official notice’ are likely to mislead by exaggerating the importance of prize draw mailings.
So what should you do if you receive a prize draw mailing and you’re unsure if it’s legitimate?
As a general rule, if something sounds too good to be true, it probably is.
- First of all, ask yourself: Have you entered a competition? If not, how likely is it that you will have won a prize?
- Have you heard of the company before? If you haven’t, look for their full name and business address on the letter. Be particularly careful if you can’t find one or if the address is merely a PO box or based abroad.
- Most importantly: Always think very carefully about sending money or giving your bank details. Responding to dishonest companies can get your name added to a list, which means you’ll be targeted by other similar mailings.
- If in doubt, err on the side of caution and get in touch with us or your local Trading Standards and we can look into things for you.
Tackling the issue
While we work to ensure that advertising does not mislead or offend, the NTS Scams Team can investigate and may take action when a company is potentially found to be involved in unfair sales and marketing practices. If a company, for example, targets consumers through direct mailings, the NTS Scams Team can work with Royal Mail and other organisations to try and stop them from being sent.
Because many of the companies who target British consumers are based abroad it can make it difficult for British authorities to effectively enforce national rules and regulations. The NTS Scams Team are therefore currently sharing information and best practice with national and international partners in a bid to stop misleading mass mailings at the source. On top of that, we can refer complaints about mailings originating abroad to members of the European Advertising Standards Alliance (EASA), who will in turn assess whether they adhere to national regulations and take action accordingly.
Our recent ruling against a prize draw mailer, Bright-Life UK, demonstrates where marketers can fall foul of the rules. We banned three of its mailings, which used phrases like “money due” and “payment due” as well as referring to a “cash award“ and “grand prize” because we considered it caused distress without justifiable reason and misleadingly implied that the recipient had won a large amount of money.
Read some of our other rulings involving prize draw mailings:
Plantiflor t/a Bakker (March 2015)
Damartex UK Ltd t/a Damart (July 2014)
Shopping Alliance Ltd t/a The World of Treats (April 2014)
Damartex UK Ltd t/a Damart (September 2013)
CAP is currently updating its guidance on sales promotions and will be sending advice to marketers who have run into trouble with their prize promotions in the past.
Help and advice
If you suspect that you, a friend or a relative have received a direct mailing that is not upfront and clear, it’s best to err on the side of caution and not respond to it. You can get help and advice from the following organisations:
Citizens Advice offer support and advice, and can refer suspect companies to Trading Standards for further investigation.
Telephone: 03454 04 05 06 (calls to the helpline cost up to 9p per minute from a landline)
Online: Complaints form
Action Fraud can assist if you believe you were the victim of a fraud.
Telephone: 0300 123 2040 (charged at your normal network rate)
Online: Fraud reporting tool
If you think that a mailing is misleading, you can raise a complaint with us. We can refer companies to NTS Scams Team for further action, or to EASA, if their advertising originates from an EASA member state abroad.
The following EASA member states also run initiatives that offer advice and assistance to consumers who are concerned about misleading direct mailings:
The Competition and Consumer Protection Commission enforces consumer protection law in Ireland and offers assistance to consumers. On its website http://www.consumerhelp.ie/ consumers can find information and advice on consumer concerns, including problematic prize draw mailings.
The Dutch advertising regulator can assess complaints about prize draw mailings (and other marketing material), and works with the Dutch Authority for Consumer & Market (ACM) when a company employs unfair commercial practices. In cases of suspected fraud, consumers can also contact the Dutch fraud help desk.