July 20, 2016, by Richard Hyde

Chesterfield FC, a Raffle and Consumer Law

As reported by the BBC a competition run by Chesterfield FC appears to have gone horribly wrong. A raffle, where the winner could win a place on Chesterfield’s pre-season tour, appears to not have been won by any of the legitimate entrants. This is obviously a public relations own goal for Chesterfield, but does it amount to a breach of consumer law?

Consumer law surrounding prize promotions is complicated. Those running such promotions would be well advised to double-check their promotions before they are rolled out to the public. The right terms and conditions are useful. For example, in the case of O’Brien v Mirror Group Newspapers 1472 people thought they had won £50,000, but in fact the conditions provided that each “winner” would be placed in a draw to win one prize of £50,000. The Consumer Protection from Unfair Trading Regulations protect consumers outside the contract.

The regulations provide that a consumer can receive a civil remedy where a misleading practice (here the implied statement that there was, in fact, a chance to win a trip) has induced him or her to enter into a contract. This seems satisfied here, but consumers appear to have been giventhe main thing that they would be entitled to by refunding the money paid for the raffle ticket. However, if a consumer has suffered either financial loss or physical or mental distress as a result of the promotion then there may be a further entitlement to compensation.

Further these regulations make it is criminal offence for a trader to engage in a prohibited commercial practice. The blacklist of prohibited practices is set out in schedule 1 of the Regulations. Paragraph 19 of schedule 1 provides that a person may not “in a commercial practice to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent.” This appears to match the situation here. Is what Chesterfield did a commercial practice? This is defined in regulation 2. It seems clear that the initial post on Chesterfield’s website, offering the chance to take part in the raffle, was a commercial communication offering to sell a product (the raffle ticket) to consumers. Therefore, it appears that there has been a breach of the regulations. Whether Chesterfield are criminally liable will depend on whether they can demonstrate that they have a due diligence defence under regulation 17. To take advantage of such a defence, they must show that the breach of the regulations was due to the actions of some other person (who can be an employee) and that they have taken all reasonable precautions to prevent such a breach. This demonstrates why it is important to have a clear audit trail setting out the instructions and training given to the staff running the raffle. Is is through this documentation that the defence may be substantiated.

Without more information it is difficult to come to a firm view on criminal liability, but this case shows that something that looks like a good idea for a promotion may quickly turn into a serious headache, and could ultimately result in a fine or, in extreme cases, a jail sentence.

Posted in Unfair Practices