Closing dates and cash alternatives

The décor isn’t really to my taste and the garden looks as though it could do with a bit of work, but for £5 you can enter a draw to win a home in Blackheath, a rather nice part of southeast London. The place I’m talking about – and to be honest I’m struggling to see beyond the wallpaper – is the prize in an apparently genuine promotion being run on the Homeraffler website. Property prize draw are very popular at the moment – I’ve written about them before – although not always with the authorities, and Homeraffler, ladies and gents, has recently been in serious trouble with the ASA, the body which regulates prize promotions in the UK.

The ASA found that, in promoting the draw, Homeraffler didn’t give the closing date adequate prominence and didn’t make it clear that the closing date could be changed, based on the number of paid entries received. These are what are described in the CAP Code, which governs all marketing communications including promotions, as ‘significant conditions’ and so the ASA decided that Homeraffler had breached the CAP Code.

Now if I can just focus in on the financial structure of this draw for a moment, according to the terms and conditions, 500,000 is the maximum number of paid entries that can be made. That means that if all the £5 tickets are sold the promoter should end up with £2.5 million in her bank account. The terms and conditions also say the property is currently valued at £1.25 million, so even though stamp duty and conveyancing fees are thrown in, it looks as though this could be quite lucrative for the home-owner, particularly as a quick online check shows that she bought the property in May 2014 for a ‘mere’ £360,000.

So there’s a lot of money at stake, and Homeraffler has indeed changed the closing date, presumably because there haven’t been enough entries – when the ASA contacted Homeraffler, it added a prominent closing date of 7 January 2018 on its home page, but that’s now been extended to 7 May 2018. However, you can’t change a closing date just because you haven’t got the number of entries you want. You can’t make it later and you can’t make it earlier, because that’s not fair and it’s prohibited by the CAP Code.

The other point where the ASA ruled against Homeraffler related to where it stated in the terms and conditions that if insufficient paid entries were received, the draw would close and the promoter would decide whether to sign over the property to the winner or award an alternative cash prize. This would be calculated as ticket sales minus 15% to cover admin and marketing.

However, the CAP Code says that a cash alternative has to be equivalent to the advertised prize. The prize in question was a ‘luxurious London home’ and the ASA ruled that a lump sum with a 15% deduction didn’t amount the same thing. Homeraffler did take note of the ASA and has amended its terms and conditions, so that if not enough cash comes it can now decide not to award the prize at all and all entry fees will be refunded. I guess it’s a shame if that happens, we’ll have to wait and see, but then again that wallpaper really isn’t me and as for the coffee table…

The prizeologists at Prizeology know exactly how to run a prize draw or competition that’s fair to all entrants and doesn’t breach the CAP Code. We can give you excellent legal and best practice advice, and if you’d like our help, get in touch.

Sarah Burns is Prizeology’s Chief Prizeologist, an IPM Board Director, and a SCAMbassador for National Trading Standards Scams Team.

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