Office of Fair Trading v Purely Creative Ltd & Ors

For the purposes of paragraph 31 of Schedule 1 to the Consumer Protection from Unfair Trading Regulations 2008, the critical question is whether the promotion creates a false impression that the consumer has won a prize or equivalent benefit. A requirement to pay or incur a cost does not automatically invalidate the impression. The court must assess the prize, the cost, and the substance of the transaction. A recommended method of claiming may suffice if its cost falsifies the impression. Under regulations 5 and 6, misleading acts and omissions must be assessed cumulatively. The causation question is whether, on the balance of probabilities, the average consumer would have taken a different transactional decision without them. The average consumer is a notional, reasonably informed, observant and circumspect consumer, assessed without an irrebuttable assumption that all promotional text will be read.

The Office of Fair Trading applied under section 215 of the Enterprise Act 2002 for an enforcement order against companies and individuals conducting prize and reward promotions. The promotions used personalised letters, scratch cards and publication inserts. Consumers were told or led to believe that they had won prizes or awards, but claiming them commonly required premium-rate calls, text messages or payments described as delivery and insurance charges.

The OFT alleged infringements of paragraph 31 of Schedule 1 and regulations 5 and 6 of the Consumer Protection from Unfair Trading Regulations 2008, together with breaches of earlier assurances given to the OFT. The central issues were the interpretation of paragraph 31, the application of the average consumer and causation tests, whether the infringements harmed the collective interests of consumers, and whether an enforcement order should be made.

1. Interpretation. Domestic regulations implementing a maximum-harmonisation directive must, so far as possible, be construed consistently with the directive’s purpose and EU jurisprudence. National-law concepts cannot control the interpretation of autonomous EU concepts.
2. Paragraph 31. The prohibition requires a false impression that the consumer has won a prize or equivalent benefit. A merely nominal and clearly identified cost will not ordinarily falsify that impression. The assessment is fact-sensitive. A payment may nevertheless show that the consumer bought, rather than won, the item, especially where the trader receives the payment and uses it to finance acquisition and delivery.
3. The relevant cost may be the cost of a method of claiming which the trader specifically recommends, particularly where that method is central to the promotion’s profitability. It is unnecessary to confine the inquiry to the cheapest available route.
4. Regulations 5 and 6. The average consumer is reasonably informed, observant and circumspect. The test is not statistical. Whether that consumer would read all promotional text is fact-sensitive and cannot be determined by an irrebuttable presumption. Misleading acts and omissions must be assessed together. The causation test is effectively whether, on the balance of probabilities, the average consumer would have made a different transactional decision without the misleading conduct.
5. “Material information” under regulation 6 means information necessary, in context, to enable the average consumer to take an informed transactional decision. Information which would merely assist or be relevant is insufficient.
6. The five promotions breached paragraph 31 and, in the specified respects, the combined effect of regulations 5 and 6. The infringements affected a substantial section of the public and therefore harmed the collective interests of consumers. The earlier assurances did not prevent an enforcement order, since they were an imperfect mechanism and did not correspond closely with the infringements proved. An enforcement order should be made; the form of the order or undertakings in lieu was adjourned for further submissions.