Type: Client Alerts
As with all forms of marketing communications, under the CAP Code, sales and prize promotions must not mislead, harm or offend their audience. In addition, the promoter must ensure that those who take part are dealt with fairly at all stages of the promotion.
The Sales Promotion Rules, contained in Section 8 of the CAP Code (the “Rules”), apply to all sales and prize promotions, and highlight, among other things, the significant conditions of the promotion which must be made clear to the consumer prior to purchase or entry.
In late 2014, CAP conducted a public consultation which proposed to make a number of amendments to the Rules. The Rules were last reviewed following the introduction of the Unfair Commercial Practices Directive ("UCPD"), and its implementation into English law through the Consumer Protection from Unfair Trading Regulations (2008). CAP has now published amended rules; in light of the consultation and to ensure that the Sales Promotion Rules reflect the current consumer protection landscape.
Key amendments to the Rules include:
- Rule 8.9 (now at 8.10 of the CAP Code), which requires promoters to demonstrate that they have made a reasonable estimate of the likely response to a promotion, has been amended to additionally require that consumers are provided with sufficient information, presented clearly and in a timely fashion, to enable them to make an informed decision on whether or not to participate. This gives promoters the ability to run a promotion where they know that response might outstrip demand, as long as they clearly provide relevant information to consumers to inform them about how likely they are to benefit. We understand that CAP will provide further guidance on this point in due course
- Rule 8.17, which requires promoters to provide consumers with all applicable significant conditions concerning a promotion, has been amended to reflect promoters’ obligation not to mislead consumers by omitting material information
- Rule 8.17.4.b has been amended to allow added flexibility for promoters to run certain promotions without a closing date, if appropriate, but indicates that a closing date will probably be needed in most circumstances. We understand that CAP will provide further guidance on this point in due course
- Rule 8.19 has been amended to require that the distinction between prizes and gifts, or equivalent benefits, must always be clear, while continuing to require promoters to avoid the use of terms which may mislead consumers
- Rule 8.28 has been amended to appear to suggest that the additional significant conditions for prize promotions only need to be disclosed in marketing materials to the extent that failure to do so would mislead consumers
- Following a recent CJEU ruling, rule 8.25 has been amended to require that winners in instant-win promotions, must not be required to incur any cost (reasonable or otherwise) to claim their prize. Previously a reasonable cost could be charged by promoters
CAP intends to produce guidance on a number of the changes to clarify their scope and application, The amended Rules became effective on Friday 1 May 2015. For CAP’s guidance on the amended Rules, please click here.
Client Alert 2015-116