The European Court of Justice recently ruled that competitions that require winners to incur costs to claim their prize are illegal, however Nick Johnson, a marketing law specialists, has called for urgent clarification of the new ruling which could see many brand and charities facing legal action.
Johnson, from City firm Osborne Clarke, has said that the ruling applies even if winners are offered another, free method of claiming their prize: “This ruling was specifically about free scratch cards that require winners to call a premium rate phone line to find out what they have won. The problem is that the ECJ has ruled that even if one method of claiming requires payment, while others are free, the entire competition is illegal. This has got wider implications, and the judgment specifically states that even the cost of a stamp would be caught.
“One of the ways National Lottery winners can claim their prize is by post, requiring the purchase of a stamp. Under the terms of the ECJ ruling that makes the entire lottery illegal under criminal law. I imagine National Lottery chiefs will be scrambling now to put in place a Freepost address, to get round this.
“Many brands and charities that run prize promotions will also need to cancel their weekends to look at their winner notification and claim processes to make sure they don’t fall foul. There’s no grace period with this new ruling, so promoters may have some tough decisions on current prize draws and competitions.”
The ruling also affects competitions where the winner has to incur costs in order to enjoy their prize. Johnson added: “Holiday prizes, for instance, don’t usually include travel to and from the initial UK airport. That’s generally in line with consumer expectations, so just mentioning it in T&Cs has been seen as adequate.
“However this new ruling suggests promoters could be committing a criminal offence by not flagging the fact more prominently. We think it’s essential the Office of Fair Trading issues urgent guidance clarifying the position for reputable businesses."