Unfair Commercial Practices Directive, Whereas, (17) Unfair Commercial Practices Directive, Whereas, (18) Unfair Commercial Practices Directive, Whereas, (19) Unfair Commercial Practices Directive, Chapter 2, Article 5, 2., (b) Unfair Commercial Practices Directive, Chapter 2, Article 5, 5. Unfair Commercial Practices Directive, Annex I, 31.

(1) Point 31, second indent, of Annex I to the Directive 2005/29 must be interpreted as prohibiting aggressive practices by which traders give the false impression that the consumer has already won a prize, while the taking of any action in relation to claiming that prize, be it requesting information concerning the nature of that prize or taking possession of it, is subject to an obligation on the consumer to pay money or to incur any cost whatsoever.

(2) It is irrelevant that the cost imposed on the consumer, such as the cost of a stamp, is de minimis compared with the value of the prize or that it does not procure the trader any benefit.

(3) It is also irrelevant that the trader offers the consumer a number of methods by which he may claim the prize, at least one of which is free of charge, if, according to one or more of the proposed methods, the consumer would incur a cost in order to obtain information on the prize or how to acquire it.

(4) It is for the national courts to assess the information provided to consumers in the light of recitals 18 and 19 in the preamble to the Directive and article 5(2)(b) thereof, that is to say, by taking into account whether that information is clear and can be understood by the public targeted by the practice.  

The plaintiffs are undertakings specialized in the distribution of mailings and the defendant is responsible for enforcing consumer protection laws, regarding the practices used by the traders. The plaintiffs and the defendant were involved in a lengthy process of consultations and negotiations with a view to obtaining an undertaking by the plaintiffs to comply with certain rules regarding advertising. As such attempts were fruitless, the defendant brought proceedings before the High Court of Justice of England and Wales seeking to restrain the plaintiffs from continuing to distribute promotions similar to some promotions made in 2008.

The abovementioned promotions included individually addressed letters, scratch-cards and other advertising inserts placed into newspapers and magazines and which had some elements in common such as: (a) the consumer was informed that he was entitled to claim one of a number of specified prizes ranging from a prize of considerable value to a prize worth, at most, a few euros (which was attributed in approximately 99% of the cases); (b) consumers were invited, in order to claim the prize, to either call a premium rate telephone number, use a reverse SMS text messaging service or obtain the information by ordinary post whereby the mentioning of the sending by post was much less clearly indicated and whereby it was established that the plaintiffs primarily generated income when the consumer used the telephone or SMS service. It was established that consumers had to pay a total cost of over 20 EUR to obtain the prize.

A second promotion involved the winning of a cruise trip. However, when claiming this prize, there were several additional costs involved, such as transport cost to the port of departure, supplements for one-bed or two-bed cabins, cost of food and drink and for port fees, etc.

The High Court ruled that these practices were unfair, but also accepted the argument that point 31 of the Annex I of the Directive would not apply if the payment required was de minimis (such as the purchase of a stamp or the cost of an ordinary telephone call) and if that payment were de minimis compared with the value of the prize won. The plaintiffs made an appeal against this decision of the High Court whereby they stated that the traders must have the possibility to charge costs when consumers are notified that they are eligible to win a prize. The defendant lodged a cross-appeal, in essence stating that the consumer should not pay any costs when the impression is created by the trader that the consumer has already won, will win or will on doing a particular act win, a prize.

The Court of Appeal decided to stay the proceedings and to submit several questions to the Court of Justice for a preliminary ruling (see under Legal issue).  

(1) Does the banned practice set out in point 31 of Annex I to the Unfair Commercial Practices Directive prohibit traders from informing consumers that they have won a prize or equivalent benefit, when in fact the consumer is invited to incur any cost, including a de minimis cost, in relation to claiming the prize or equivalent benefit?

(2) If the trader offers the consumer a variety of possible methods of claiming the prize or equivalent benefit, is point 31 of Annex I to the Unfair Commercial Practices Directive breached if taking any action in relation to any of the methods of claiming the prize or equivalent benefit is subject to the consumer incurring a cost, including a de minimis cost?

(3) If point 31 of Annex I to the Unfair Commercial Practicies Directive is not breached where the method of claiming the prize or equivalent benefit involves the consumer in incurring de minimis costs only, how is the national court to judge whether such costs are de minimis? In particular, must such costs be wholly necessary: (a) in order for the promoter to identify the consumer as the winner of the prize, and/or  (b) for the consumer to take possession of the prize, and/or (c) for the consumer to enjoy the experience described as the prize?

(4) Does the use of the words “false impression” in point 31 of Annex I to the Unfair Commercial Practices Directive impose some requirements additional to the requirement that the consumer pays money or incurs a cost in relation to claiming the prize, in order for the national court to find that the provisions of point 31 have been contravened?

(5) If so, how is the national court to determine whether such a “false impression” has been created? In particular, is the national court required to consider the relative value of the prize as compared with the cost of claiming it in deciding whether a “false impression” has been created? If so, should that “relative value” be assessed by reference to: (a) the unit cost to the promoter in acquiring the prize; or; (b) the unit cost to the promoter in providing the prize to the consumer; or (c) the value that the consumer may attribute to the prize by reference to an assessment of the “market value” of an equivalent item for purchase?’

The Court first refers to the argument of the plaintiffs, who stated that the expression "creating the false impression" should be interpreted as such that the trader should have misled the consumer, so that the two situations as foreseen in point 31 of Annex I to the Directive (i.e. where there is no prize and where the consumer's action to claim the prize is subject to the consumer paying a cost) are only applicable when it is proven that the trader has misled the consumer, hence should not be applied when the consumer is provided with sufficient information, e.g. in relation to the costs payable to claim the prize. This is not correct according to the European Court. According to the Court, the prohibited practice consists in the creation of one of the impressions referred to in the first part of that paragraph, whereas, as stated in the second part of that paragraph, those impressions do not correspond to reality.

Further, in relation to costs (and the amount thereof) that could be asked from a consumer, the Court is very clear. The wording of point 31 in Annex I does not allow for any exception, meaning that it is evident that the expression "incur a cost" does not allow the consumer to bear the slightest cost, even if it is de minimis compared with the value of the prize or a cost which would not procure any advantage for the trader, such as the cost of a stamp. The European Court adds that given the absolute nature of the prohibition on imposing any cost, the offer of a number of options cannot eliminate the unfair character of the practice if any of the proposed options were to require the consumer to bear a cost, even a de minimis cost compared with the value of the prize. Further, the  Court also points out that the practice is blacklisted, hence it does not need to be investigated whether it is misleading in the first place. Also, as the practice is listed under the "aggressive" practices, the question whether the practice of the trader is misleading does not play any role in the assessment.

The traders had also claimed that providing the consumer with adequate information concerning the nature of the prize and the conditions for collecting it, would make it possible to conclude that the practice is not unfair. In that regard, the Court distinguishes between the prize itself and the taking possession thereof. The Court states that, while the consumer cannot influence the prize description, point 31 of Annex I prohibits making action taken in relation to claiming the prize subject to the obligation, for the consumer, to pay money or incur a cost. However, the description of the prize can play an important role. In the decision, the example is given of an "entrance ticket" for a certain football match. When a trader awards an entrance ticket, this does not include the transport of the consumer from his home to the football stadium. However, when awarding "attendance" at a sports event, the trader must bear the costs of the consumer’s travel, hence the trader cannot require the consumer to pay for these costs as this would be an infringement of point 31 of Annex I.

The Court finally states that, like every other item of information provided by a trader to a consumer, information on the substance of the prize must be examined and assessed by the national courts in the light of recitals 18 and 19 in the preamble to the Directive 2005/29, and of Article 5(2)(b) of the Directive. This concerns the availability of the information and how it is presented, the legibility and clarity of the wording and whether it can be understood by the public targeted by the practice.

URL: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0428:EN:HTML

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The plaintiffs' arguments were dismissed.