Source: https://www.howtocrackanut.com/blog/tag/winner
Timestamp: 2019-08-24 14:32:56
Document Index: 315322552

Matched Legal Cases: ['CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'Art 8', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ']

In its Judgment of 18 October 2012 in case C-428/11 Purely Creative and Others v Office of Fair Trading, the CJEU was confronted with the interpretation of consumer protection rules in the field of aggressive commercial practices in a distant sales scenario. The CJEU has significantly raised the barrier for the conduct of commercial practices that include the award of 'prizes' and call the targeted consumer a 'winner' if she must assume any cost (even that of buying a stamp) to claim the prize, by determining that "the prohibition on making the consumer bear any cost whatsoever is absolute, whether it be the cost of a stamp or of a simple telephone conversation". In my opinion, the CJEU has overshot the mark of consumer protection.
The Office of Fair Trading (OFT) took issue with these commercial practices and brought proceedings before the High Court of Justice of England and Wales, Chancery Division (Companies Court) seeking to restrain the traders from continuing to distribute promotions. The High Court found that the promotions involved unfair practices, albeit on a more limited basis than contended by the OFT. In short, the High Court found that the commercial practices would only be acceptable "if the payment required was de minimis (such as the purchase of a stamp or the cost of an ordinary telephone call), no part of which would benefit the trader concerned, and if that payment were de minimis compared with the value of the prize won" (account rendered by the CJEU in C-428/11 at para 19, emphasis added).
According to the CJEU, indeed, the proper legal basis for the analysis in this case was Dir 2005/29/EC and, more specifically, its rules preventing the conduct of aggressive commercial practices against consumers. According to Art 8 Dir 2005/29/EC, 'A commercial practice shall be regarded as aggressive if, in its factual context, taking account of all its features and circumstances, by harassment, coercion, including the use of physical force, or undue influence, it significantly impairs or is likely to significantly impair the average consumer’s freedom of choice or conduct with regard to the product and thereby causes him or is likely to cause him to take a transactional decision that he would not have taken otherwise'.
More specifically, annex I to the Dir 2005/29/EC is a list of 31 paragraphs that describe practices which are in all circumstances regarded as unfair. Under paragraph 20, ‘[d]escribing a product as “gratis”, “free”, “without charge” or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item’ is considered an unfairly aggressive commercial practice. Identically, under paragraph 31, ‘[c]reating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either, [a)] there is no prize or other equivalent benefit, or [b)] taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.’
29 [...] the term ‘false’ is not vital to an understanding of paragraph 31 of Annex I to the Unfair Commercial Practices Directive but merely reinforces the sentence in question (sic). 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.
30 [...] according to the wording of that provision, an unfair practice exists where the consumer is subject to a requirement to pay money or incur a cost on taking any action to claim what is presented to him as a prize or other equivalent benefit. That wording 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.
31 The wording of the phrase ‘action in relation to claiming the prize’ is imprecise, it being possible therefore that it covers, inter alia, any step taken by the consumer in order to obtain information about the nature of his prize or to collect it. [...]
34 In addition, 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. [...]
38 [...] the practice at issue in paragraph 31, second indent, of Annex I to the Unfair Commercial Practices Directive exploits the psychological effect caused by the announcement of the winning of a prize, in order to induce the consumer to make a choice which is not always rational, such as calling a premium rate telephone number to ask for information about the nature of the prize, travelling at great expense to collect an item of low-value crockery or paying the delivery costs of a book which he already has (sic). [...]
40 [...] prohibiting traders from making the consumer bear the slightest cost would not make it impossible to organise such promotional campaigns. The trader could impose a geographic limitation on participation in the competition or in the promotion, so as to limit the costs he would have to bear which are associated with travel by the consumer and with the formalities for the consumer’s taking possession of the prize. When determining the value of the prizes to be distributed, the trader could also take into account the communication or delivery costs he would have to bear. [...]
42 [...] clarification of the interpretation of paragraph 31 of Annex I to the Unfair Commercial Practices Directive can be provided by a reading of paragraph 20 of that annex. According to that provision, there is a misleading practice where a product is described as ‘gratis’, ‘free’ ‘without charge’ or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item. Paragraph 31 of Annex I to the directive does not contain similar wording, confirming that that paragraph should be interpreted as meaning that the prohibition on making the consumer bear any cost whatsoever is absolute, whether it be the cost of a stamp or of a simple telephone conversation (sic). [...]
50 [...] it is not permissible to allow action to be taken in relation to the claiming of a prize pursuant to a multi-option scheme, proposed to the consumer by the trader, where at least one of the methods would not involve any payment. It is the very prospect of taking possession of the prize which influences the consumer and may cause him to take a decision he would not take otherwise, such as choosing the quickest method of finding out what prize he has won, even though that may be the most expensive method. (C-428/11 at paras 29 to 50, emphasis added).
In a nutshell, the position of the CJEU makes life very difficult for companies willing to attract consumers by offering legitimate and true prizes, since they now have to internalize the tiniest of the costs involved. This position is very strict and, from my view, overshoots the mark--possibly on the basis of rather extreme assumptions of irrational consumer behaviour such as those presented in paragraph 38 of the Judgment (which, in my view, do not seem to represent the actual behaviour of the average consumer or would, at least, have deserved some further evidentiary support). The position advanced by the High Court of Justice of England and Wales, Chancery Division (Companies Court) was preferable because it set a more proportionate standard. I find two faults in the reasoning of the CJEU.
First, in paragraph 29, I think that the CJEU fails to give proper value to the expression 'false' impression. If the consumer is not mislead because she has full, proper information of the de minimis costs required to claim the prize, there seems to be no need to extend the protection. In this regard, resorting to paragraph 20 as an interpretative tool seems correct, but the CJEU seems to have extracted the wrong conclusions. Given that paragraph 20 deals with the concept of 'free' (a rather absolute and appealing concept) and still allows for de minimis charges that are the unavoidable cost of responding to the commercial practice, it seems to impose a clear de minimis threshold for the analysis of the relevance of the costs retained by consumers (ie not internalized by the trader running the promotion). And this de minimis threshold or safe harbour should have been extended to paragraph 31 under the systematic interpretation conducted by the CJEU. Otherwise, the construction of paragraph 31 of annex I Dir 2005/29/EC as the CJEU at para 42 of Purely Creative v OFT is an expansive interpretation of a prohibitive rule (since the 'absolute' element of no-cost that the CJEU brings to the provision is arguably not there, once resort to paragrah 20 is had as an interpretative tool). And expansive or analogic interpretation of prohibitive rules runs against basic principles of legal interpretation [whatever is not prohibited is thereby ipso facto permitted].
Second, the reasoning that the CJEU offers to support the adoption of such a per se prohibition seems faulty too. At paras 45 to 47 of Purely Creative v OFT he CJEU considers that
Formally, the reasoning is correct. However, it is in open contradiction with the following finding of the CJEU in the same Judgment: "[c]lear and sufficient consumer information is important where the trader wishes to ensure that consumers can identify a prize and assess its nature" (para 53) and, therefore "[l]ike 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 {Dir 2005/29/EC], and of Article 5(2)(b) of the directive. That 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" (para 55). Therefore, national courts cannot conduct an automatic interpretation of paragraph 31 of annex I of Dir 2005/29/EC anyway. And, if so, the provision is simply badly tailored to become a per se rule--which should allow for a case by case scrutiny of the information provided to consumers (ie the 'false impression' prong of the text) as well as of the actual costs necessary to redeem the prize (as ruled by the High Court of England and Wales). Otherwise, we have an asymmetrical per se rule that unnecessarily restricts business possibilities without clearly increasing (actual, effective) consumer protection, nor reducing litigation (costs and occurrences).
Tags Directive 2005/29/EC, aggressive practices, article 8, consumer protection, de minimis costs, free, paragraph 20 annex I, paragraph 31 annex I, per se rule, prize, winner