Following action by the OFT, a premium rate prize promoter and its director have given undertakings to the High Court that they will not publish misleading prize draw advertisements or promote unlawful lotteries.
Churchcastle Limited distributed over 446,000 mailings under the name ‘Prize Line’ giving the impression that the recipient had been awarded a major prize. Consumers were urged to reply immediately by calling a premium rate number at a cost of £1.50 per minute.
At least 56,000 people called the premium rate number. With calls lasting up to five minutes, the total cost to some callers was as much as £7.50.
The OFT considered that the mailings were misleading as their layout and presentation gave the impression that, as a result of an entry in a previous competition, recipients had won a major prize such as £10,000 cash, a fitted kitchen, or a widescreen television.
In fact nearly everyone who responded was awarded a low value ‘giveaway’ item of a voucher booklet which was subject to restrictions on its use. The OFT also considered that the mailings constituted unlawful lotteries because the free entry route to participate in the prize draw was not publicised in such a way as to be likely to come to a recipient’s attention.
The company sent out similar mailings in the name ‘Prize Trust’ and ‘UK Prize Foundation’.
Churchcastle Limited and its director Neil Frogley had previously given undertakings to the OFT in June 2005 in relation to other premium rate prize mailings. However, the OFT believed that they had breached those undertakings.
The undertakings to the High Court were given under the Enterprise Act 2002 and relate to compliance with the Control of Misleading Advertisements Regulations 1988 and the Lotteries and Amusements Act 1976. If a company or person who gives an undertaking to the court subsequently breaches them, they may be held in contempt of court which can carry a penalty of imprisonment, a fine or asset seizure.
The OFT worked closely with Local Authority Trading Standards Services, the Advertising Standards Authority and ICSTIS in collecting evidence for the court action.
Christine Wade, Assistant Chief Executive, Consumer Advice and Trading Standards told UK Scams:
‘This company published misleading mailings that gave the impression that recipients had won a major prize in order to induce them to call a premium rate number. We will not hesitate to act to protect consumers from deceptive practices such as this.’
