Legal Alert – ECJ Judgment on Consumer Protection – Prize Promotions

False prize impression 

The core idea of the ECJ judgment is to prevent promoters from creating the false impression that a consumer has already won a prize when in fact taking any action to claiming the prize will impose on the consumer paying money or incurring a cost. Such promotions are considered as unfair commercial practices in the European Union under the UCPD regulations.

In the proceedings before the ECJ it was argued that the “false” element here is essential, so if consumers were in advance informed about the costs which they will have to cover trying to obtain their prize, there would be nothing misleading and unfair. However, the ECJ stated that the false impression consists of the mere fact that a consumer is made to think that he has won a prize when actually it turns out he has to pay something to get the promised benefit. A “prize” for which one is required to pay something cannot be regarded as a true prize, is the final conclusion of the ECJ.

That is why even providing the consumers with adequate information on the conditions for claiming the prize would not make it possible to conclude that the promotion is not unfair.

Interpretation of “claiming the prize” 

The UCPD provisions generally prohibit promoters to make prize winners undertake any action in relation to claiming the prize which is subject to the consumer paying money or incurring a cost. Therefore, defining what “action in relation to claiming the prize” should cover comes right at the top of the agenda.

The ECJ admits that the wording of the phrase is somehow imprecise and states that it should include, inter alia, any step taken by the consumer in order to obtain information about the nature of the prize or to collect it.

Thus, the ECJ makes a large step towards protecting the consumers by expanding the ban on the introduction of costs to be borne by prize winners not only to costs related to receiving the prize, but also to requesting information about it.

De minimis rule not respected 

The High Court of Justice of England and Wales, which is the first instance in the initial court proceedings, had suggested that minimal costs (such as that of a stamp) could be imposed on prize winners, provided that the promoters did not benefitLegal-Alert-ECJ-Judgment-on-Consumer-Protection-Prize-Promotions from such costs. However, the Court of Appeal, which is the referring court, was not convinced by the High Court’s de minimis argument. Neither was the ECJ.

The ECJ insists that the wording of the UCPD does not allow for any exception from the ban. In particular, it does not allow the consumers to bear the slightest cost, even if it is de minimis compared with the value of the prize or a cost which would not provide any benefit to the promoter, such as the cost of a postage stamp or ordinary phone call.

A convincing argument in favour of the ECJ’s decision not to respect the de minimis rule is that the provision of the UCPD prohibiting promotions as those in question appears in Annex 1 which contains a list of commercial practices regarded as unfair in all circumstances, i.e. no assessment on case-by-case basis should be tolerated, as such would have definitely been necessary if the de minimis rule were followed.