Prize draws – when a closing date is a closing date

As I’ve highlighted before, property raffles are becoming increasingly popular. The chance to win a house is obviously attractive for punters, but for promoters the legal pitfalls are manifold, and the ASA has just ruled on a complaint about one competition which offered a two-bedroom terraced house in Durham as a prize.

The promotion was run by a company called HMV Competitions (not the entertainment retailer – ‘HMV’ apparently stood for ‘Homes, Motors and Valuables’ not ‘His Master’s Voice’ – and you won’t be surprised to hear that the name has since been changed) and, according to local estate agents Pattinsons, in June 2017 the prize was worth £42,950 and was being rented out at £280 per month (no, London-living readers, I haven’t missed off a nought – that’s £280 per month).

Tickets were available for £5 each and the aim was to sell 20,000 of them, giving potential sales for the promoter of £100,000 and a theoretical ‘profit’ of just over £57,000. Of course, the promoter had expenses (they were listed as extensive legal costs, card processing fees, sales costs, ticketing costs, website building and hosting costs, plus all of the original house purchase costs and tax) and there was a commitment to give away £6,000 to charity.

I’m not sure what the closing date was originally, but the terms and conditions, which you can still read online, clearly state that it was extended to 10 December 2017. This was because, as seems to be the case quite often in this type of draw, insufficient tickets had been sold, and it was the basis of the complaint to the ASA. However, the CAP Code clearly states that you can’t extend a closing date unless it’s due to unavoidable circumstances beyond the control of the promoter. The ASA summarised HMV Competitions’ defence as follows and I think it’s worth quoting in full:

“HMV Competitions said that when they took the decision to extend the closing date, their only other option was to cancel the whole draw and refund participants. They said had they done that, no one would have won and none of the charities set to benefit would have done so. They did not believe anyone had been disadvantaged by the delay and said the terms and conditions, which participants were required to tick to confirm they had read and agreed with, stated that there was an option to extend the draw date.”

On the surface, this doesn’t seem unreasonable, does it, but the ASA upheld the complaint against HMV Competitions because it said extending the closing date was unfair to people who had bought tickets under the original terms and conditions. The fact that the eventual winner – who, because the number of people entering the draw was lower than anticipated, picked up a cheque for £7,000 not the keys to the house – had bought a ticket after the first closing date underlines that unfairness.

After the prize had been awarded, a Facebook update apparently stated that the winner “originally saw the feature in The Sun in October and meant to buy a ticket then but forgot until the last few weeks”. If I had paid my £5 and entered the draw well before the original closing date, I think I might have been quite annoyed, not least because I’d have had a higher chance of winning at that point.

The ASA stated that the change to the closing date and the prize value were not the result of unavoidable circumstances at all, but the promoter’s choice, which meant HMV Competitions had contravened the CAP Code. You can read the full ruling here and there’s also an interesting – well, to my mind anyway – second element in which the ASA itself challenged whether a route to entering the draw without paying anything was given sufficient prominence on the HMV Competitions website.

Be it a doll’s house or a palace, whatever you’re giving away, getting the terms and conditions right can be tricky. At Prizeology we specialise in writing terms and conditions that your customers will understand and which won’t breach the CAP Code. Get in touch if this is something we can do for you.

Sarah Burns is Prizeology’s Chief Prizeologist and a SCAMbassador for the National Trading Standards Scams Team.

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