100k fine for misleading scratchcard promotions

6 August 2009

PhonepayPlus has fined Abstract Games Limited (trading as Mediaprom) £100,000 and barred it from providing or operating any scratchcard services for six months, except those for which compliance advice has been sought and implemented to PhonepayPlus’ satisfaction.

PhonepayPlus’ adjudication follows a lengthy investigation, a subsequent decision by a Tribunal and an Oral Hearing which was subsequently requested by Abstract Games Limited. The company now has until 24 August 2009 to exercise its final right to an appeal under the Code.  Such an appeal would be made to the Independent Appeals Body.

The service in question was promoted by a large number of scratchcards distributed via national magazines and newspapers. Consumers were invited to scratch off a panel to see whether they had won a prize and, if successful (as the vast majority of participants were), they were then required to follow instructions included on the scratchcard which explained how to claim the prize. Those who claimed by sending a text message were also entered into a premium rate subscription quiz service. 

PhonepayPlus had received 132 complaints regarding the service by the time of the original adjudication in February, and has received more since then. Most claimed to have been misled and/or complained about the receipt of unsolicited charged texts.  The complaints clearly showed that these consumers were unaware of the subscription nature of the service and had simply believed that they were making a one-off payment to claim an award.

The Oral Hearing Tribunal found that the scratchcard designs were misleading and were intended to maximise Abstract Games Limited’s revenue.  It also found that Abstract Games Limited had been wilful in relation to the design of the scratchcards, which had made it probable that consumers responding to the competition and seeking to claim their awards by text would not realise that they were also subscribing into a quiz service.  

The Oral Hearing Tribunal also found (as was admitted by Abstract Games Limited) that some scratchcards had failed to give information which was likely to affect a consumer’s decision to participate, and in particular an adequate description of the competition prizes. The scratchcards failed to include the number of low value prizes on offer which could have misled consumers into believing that their chances of winning a high value award were greater than they were.

Simon Bates, PhonepayPlus Director of Standards & Communications commented: “The Tribunal’s decision serves as a reminder that misleading promotions and, in particular, subscription services masquerading as one-off payments, are wholly unacceptable and will be met with tough sanctions. Any provider that is in any doubt as to how to promote such services should contact us for compliance advice and guidance.”

Full details of the Oral Hearing adjudication (case 751131) can be found on the PhonepayPlus adjudications database