Decision re: Direct Mail Advertisement

DECISION



Meeting 11 July 2006


Complaint 06/190

Complainant: S. Hood
Advertisement: Readers Digest Pty Limited





Complaint: The direct mail advertisement was addressed:
RUSH

ISSUE



UNCLAIMED CASH NOTICE ENCLOSED

$45, 000 AWAITING DISBURSEMENT



Written on the back of the cover was:

$45,000 “PRE-DRAWN LUCKY NUMBER GIVEAWAY”

PRIZE FUNDS UNCLAIMED

OPEN IMMEDIATELY TO FIND OUT HOW TO

ACTIVATE YOUR PERSONAL LUCKY NUMBER

- LIMITED- RELEASE DOCUMENT

Text inside said:

“Lucky Recipient:

As of today, the $45,000 Pre-drawn Lucky Number Giveaway prize cash remains unclaimed. A limited number of exclusive personal lucky numbers have been rush-released to a select group of lucky recipients. One such lucky number is now in your hands. Prize Officials confirm that this personal lucky number is from the group of entries from which the winner will be declared. Therefore, there's reason to believe that the lucky number you're holding could match the winning number already drawn - an instant $45,000 cash to spend however you see fit! But hurry, you must first register and activate your Lucky number to be part of our Pre-drawn Lucky Number Giveaway.

So it's crucial you contact us immediately for more about your prize claim eligibility. Get online or get on the phone to activate your lucky number today! An instant $45,000 in your bank account could depend on it.

Visit us at
www.readersdigest.co.nz/win

and follow the instructions to register and activate your personal lucky number.

Upon verification as prize winner, $45,000 guaranteed to be transferred to your bank account within 72 hours of draw.”

Complainant, S. Hood, said:



“I wish to make a complaint against Readers Digest for a recent circular put in our mail box regarding an apparent “unclaimed cash notice”.

Now this circular is misleading in numerous ways.

1. It gives the impression that you have either won the $45,000 prize or that you have a good chance to win. However, this is clearly not the case, as in all likelihood, there must have been thousands, if not tens of thousands of these so-called "lucky numbers" sent out.

2. It also gives the impression that it is a "lucky number" (ie. valuable) has been given to you. The circular goes as far as saying "A limited number of exclusive personal lucky numbers have been rush-released to a select group of lucky recipients". I do not find it being either "limited number", "exclusive", or "select group", if such numbers are mailed out the in tens of thousands (and quite possibly in the millions) to people in both NZ and Australia. In fact their own website states that the odds of win the $45,000 prize is 1 in 4,234,000!

3. That it gives the impression that one was lucky to receive this circular. However, the only "luck" one apparently requires to get one is to have a mail box in either NZ or Australia. I don't believe this can be honestly be termed as luck.

4. That in 2 places on this circular it tells you that you need to "immediately" contact them regarding the prize. This is despite the fact that the prize is not going to be drawn until 22 December 2006, over 6 months away.

5. That the prize has been “unclaimed” The reason it has been unclaimed is that the prize is not drawn until December 2006!

6. Finally, they have neglected to state the important fact that this draw includes Australia as well as NZ, making the odds of winning so much more impossible. This is despite the fact that it says on the circular is “Issued by Reader's Digest New Zealand” (it would seem it is also open to Readers Digest Australia as well)

I have found this circular to be misleading on so many grounds. This circular should not of been sent out in the first place.”




The Chairman ruled that the following provision was relevant:



Code of Ethics



Rule 2: Truthful Presentation - Advertisements should not contain any statement or visual presentation or create an overall impression which directly or by implication, omission, ambiguity or exaggerated claim is misleading or deceptive, is likely to deceive or mislead the consumer, makes false and misleading representation, abuses the trust of the consumer or exploits his/her lack of experience or knowledge. (Obvious hyperbole, identifiable as such, is not considered to be misleading).




The Advertiser, Reader’s Digest Pty Limited, said:



“Thank you for your letter dated 6 June 2006 requesting our comments on the issues raised in the above-captioned complaint from S. Hood.

Our comments below are directed to responding to S. Hood's specific issues addressed in order of his letter.

1. S. Hood is concerned because the circular in his view “gives the impression that you have either won the $45,000 prize or that you must have a good chance to win...”

Response: The promotion under review is called: “The Pre-Drawn Lucky Number Giveaway”. This is indicated clearly in the circular. Here a number has been pre-drawn and the person who holds the pre-drawn number will win the prize at the end of the promotion on 20 December 2006 so long, of course, as they respond. Further, if the recipient of the actual pre-drawn number does not return it to Reader's Digest the prize will still be awarded, in that case to the person who has the next ascending number. The circular directs the recipients to the Reader's Digest web site - www.readersdigest.com.au and recipients have plenty of opportunity to view the full terms and conditions of the draw which clearly set out how a person might win the prize. (The web site is clearly referenced in 2 places in the circular).

Paragraph 8 of the rules explains how the Lucky Number Giveaway works and we cite it in its entirety:

For the Lucky Number Giveaway, the winning number was randomly selected at a drawing by Chartered Accountants KPMG before the promotion commenced. KPMG retain the winning number in a security safe while the promotion is running. After the promotion closes on 20 December 2006, the winning number will be released by KPMG to the Sweepstakes Controller who will verify that the customer who was issued the winning number has in fact returned it to Reader's Digest. If the winning number has not been returned, the $45, 000 prize will be awarded to the person who returns the next nearest ascending number to the non-returned winning number. The winner will be announced on 22 December 2006 at 10:30am AEDST at Reader's Digest in Sydney.

It is clear from the explanation in this paragraph that KPMG selected the winning number in advance of S. Hood having received the circular; it is equally clear that someone has received, and holds, the winning number - hence, it is true that someone has essentially won the $45,000 prize (subject to following standard instructions/procedures) and it is accurate for Reader's Digest to state, or “create the impression” in the headline of the promotional material that someone has won.

We do not agree that the circular “gives the impression that you have a good chance to win”. The circular does not state or intimate that S. Hood's chances are better than those of anyone else's; it simply states - based on the factual workings of the pre-draw as described above - that he could hold the winning number pre-selected by KPMG.

If the promotional materials are considered as a whole, as they should be, rather than considering the individual elements in isolation, it is clear that every recipient has a chance to win, so long as they respond, either because they hold the winning number or they hold the closest ascending number to the pre-drawn number.

2. S. Hood complains that the circular gives the impression that the lucky number is "valuable" and promoted as "limited in number" and "exclusive".

Response: As explained above, the terms of the circular plus the rules fully explain the workings of the Lucky Number Pre-Draw. Considering the promotion as a whole, a recipient will quickly realize that the use of "limited", "lucky" and "exclusive" is obvious hyperbole. Having said that, Reader's Digest has sent out less than 2 million notices to two countries (Australia and New Zealand) with a total population exceeding 24 million. So less than 10% of the combined population received the notice. As stated above, the recipient may indeed hold the winning number selected by KPMG and it is not inappropriate for a recipient to conclude, nor for the promoter to suggest, that the number may be "valuable" - because in fact, if it is the winning number, it would be worth $45,000.

3. Use of the word "Luck"

Response: As previously stated, the circular was sent to a much smaller quantity than S. Hood believes to be the case. Given that approximately 9/10ths of the population in Australia and New Zealand did not receive the notice and that every recipient does have a chance to win, so long as they respond, it is fair to the consumer to refer to them as a lucky recipient.

4. Use of the word "Immediate"

Response: Viewed as a whole, the promotional material makes it clear to the recipient, in the excerpt from the rules, when the draw takes place.

It is, however, a common practice or custom in direct marketing to "invite" or "urge" individuals to respond "immediately". This is because it is not possible for direct marketers to know or control the timing of when the recipients will actually look at their promotional materials. If the recipient does not respond immediately they risk forgetting about the notice and missing the chance to win. We do not see this as being either misleading or unfair to the recipient.

5. Prize is "unclaimed"

Response: The use of the word "unclaimed" is designed to simply draw attention to the fact that the 95th Sweepstakes is not over and the prize is yet to be won. While the number may be known, unless the winner responds then another number will become the winning number. In that sense the prize is clearly unclaimed.

6. Non-Inclusion of Australia

Response: The Promotional Material clearly states that the winner will be announced in an Australian paper as well as in a New Zealand paper and directs the recipients to an Australian website for terms and conditions. Further, we indicated above that the circular clearly points the recipients to the web site to have access to the full set of rules and the wording of paragraph 1 of the rules sets out the approximate odds of winning the Lucky Number Giveaway so that no one is misled. In addition, the first line of paragraph one of the rules stipulates clearly that the Sweepstakes is open to residents of Australia and New Zealand. In any case the inclusion of Australian recipients does not result in the odds of winning being "impossible". For the reasons set out in paragraph 1 above it is not impossible at all; someone will win $45,000.

In conclusion, having looked at previous decisions of the ASCB where you consider the application of Rule 2 we understand that the ASCB takes a pragmatic fact based approach to an advertisement. The overriding concern of the ASCB appears to be to ensure that when an advertisement is considered as a whole, rather than focusing on individual elements, it is fair to the consumer, and any conditions that qualify a headline offer are sufficiently clear to the reader.

We suggest that each of these conditions has been met and that the unclaimed cash notice, when viewed as a whole, clearly and truthfully sets out the offer available to the recipient.”

Deliberation

The Complaints Board perused the relevant correspondence and the advertisement. It noted S. Hood’s view that the advertisement was misleading on more than one ground.

The Chairman directed the Complaints Board to consider the complaint in relation to Rule 2 of the Code of Ethics, or more particularly whether in the Complaints Board’s view the advertisement contained any statement, or created an overall impression, which directly or by implication, omission or ambiguity was likely to mislead or deceive the consumer.

As a preliminary matter, the Complaints Board reiterated its long held position, that should any claim in an advertisement be challenged, the onus lay with the advertiser to substantiate that claim.

Turning to the advertisement, it noted the use of such phrases as: "A limited number of exclusive personal lucky numbers have been rush-released to a select group of lucky recipients".

It also noted the Advertiser’s response regarding the use of “limited”, “lucky” and “exclusive” which said that “Considering the promotion as a whole, a recipient will quickly realize” that they are “obvious hyperbole”.

The Complaints Board also noted the Advertiser’s response where it said:

“that the circular clearly points the recipients to the web site to have access to the full set of rules and the wording of paragraph 1 of the rules sets out the approximate odds of winning the Lucky Number Giveaway so that no one is misled.”

With regard to this matter, the Complaints Board reiterated the previously confirmed long-held requirement under the Advertising Codes, for an advertisement to “stand alone”, that is to provide all information to the consumer in the same context as the initial offer, particularly where further information and conditions diminished the offer, such as in the matter before it. This was stated in Decision 94/90 where it said in the Deliberation:

“The Board therefore ruled that where special conditions or qualifications reduced the value of the offer then they should be brought to the attention of the viewer or the reader in an obvious way.”

Furthermore, in Decision 93/105, the Deliberation included:

“The conditions in fact significantly altered the offer in the headline and therefore should have been spelt out. The Board ruled accordingly.”

As this was not the case in the advertisement before it, the Complaints Board was of the view that the advertisement did not meet the requirements of truth and clarity as stated in Rule 2, and was misleading and in breach of Rule 2 with regard to this issue.

The Complaints Board then referred to the Advertiser’s response where it said that “less than 2 million notices” had been sent out and that this amounted to notices being received by less than 10% of the combined populations of New Zealand and Australia. The Complaints Board was unanimously of the view that this did not in any way substantiate the use of the words “limited” or “exclusive”, and rather than being “advertising puff” or hyperbole, the phrase amounted to an exaggerated claim which would be likely to mislead the consumer.

It then referred to point 4 in the complaint which referred to the fact that the “Lucky Recipient” of the advertising material was urged to “open immediately” and make “contact immediately” for more information. It noted that in fact the prize winner was not going to be confirmed until December 2006. It also noted the Advertiser’s explanation for using such messages, but was of the view that they also contributed to the overall tone of the advertisement in a manner which was likely to mislead the consumer.

Turning to point 5 of the Complaint which concerned the claim: “prize funds unclaimed”, the Complaints Board was of the view that this created a misleading impression as in fact the winner would remain unknown until the draw which was scheduled to take place on 22 December. Accordingly, the Complaints Board said this statement also contributed to the overall tone of the advertisement in a manner which was likely to mislead the consumer.

The Complaints Board was of the view that the language used throughout the advertisement was similar in tone to that identified above. It included phrases and calls to action such as: “rush issue”, “open immediately”, “activate your lucky number today”, “An instant $45,000 in your bank account could depend on it.” The Complaints Board acknowledged that advertising by its very nature, often contained language and statements which could be described as “hyperbolic”. However, the Complaints Board was of the view that the accumulation of all the statements and calls to action in the advertisement before it went beyond acceptable hyperbole, conveying an extreme and over optimistic impression that a recipient of the mailer was a likely “winner”. Accordingly, in its view, the advertisement crossed over the line from being hyperbolic in nature, to creating an overall impression which by implication and use of exaggerated claims would be likely to mislead the consumer.

Having made the above observations, the Complaints Board said that advertisement as a whole failed to meet the test of truthful presentation as required by Rule 2 of the Code of Ethics, and thereby was in breach of that rule.

The Complaints Board ruled to uphold the complaint.

Decision: Complaint Upheld

ENDS

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