Motorcycle Purchase by nmb11693

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									                                                                              08/525


                                    DECISION

                           Meeting 11 November 2008


Complaint 08/525


                       Complainant: M. Henderson & M. Barron
                       Advertisement: New Zealand Lotteries Commission


Complaint: A flyer for the New Zealand Lotteries Commission showed a large
picture of a car and a Harley Davidson motorbike. Text above the pictures said
“YOUR DAD COULD WIN ONE OF 20”, and text below the picture said “BOYS
TOYS. 10 HSV GTS’ + HARLEY DAVIDSONS”. Smaller text said “GRAB A TRIPLE
DIP FOR DAD TODAY”. Fine print at the bottom of the page said “Terms and
conditions apply. See instore or online at mylotto.co.nz for details”. Paragraph 5 of
the terms and conditions specified that the Harley Davidson prizes were “Ten
$31,500 cash prizes each paid in money by direct credit or cheque (with such
amount being the approximate price of a 2009 Harley-Davidson FLSTF Fatboy
including on road costs).


Complainant, M. Henderson, said:

“Type: Other
Where: The 6th September fathers day lotto prize of 10 HSV GTS' and 10 Harley
Davidsons was widely advertise on Television, newspapers and in hand-out flyers at
all lotto outlets. I attach a copy of a flyer that was available at all Lotto outlets
advertising the prizes that one could possibly win.
Who: NZ Lotteries
Product: Lotto Prize

Complaint -
This Law Centre was approached by a client concerned that they had been mislead
as to the prize being offered in the recent Fathers Day lotto draw of 6th September.
Store advertisements, as well as tv ads indicated prizes included 10 Harley Davidson
motorbikes. When one reads Paras 5 and 6 of the terms and conditions, it is
apparent that no bikes are being offered as prizes, rather $31,500 in cash is the
prize. We consider the advertisement was deliberately misleading, requiring the
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reading of the "Terms and Conditions" to see that there NEVER such a prize as a
Harley Davidson bike, let alone 10 of them up for grabs.”


A Duplicate Complainant, M. Baron, shared similar views.


The Chairman ruled that the following provisions were 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).

Code for Advertising Gaming and Gambling

      Principle 3: - Advertisements should not by implication, omission,
      ambiguity or exaggerated claim mislead or deceive or be likely to mislead
      or deceive consumers, abuse the trust of or exploit the lack of knowledge
      of consumers, exploit the superstitious or without justifiable reason play
      on fear.

      Principle 3 Guideline (a): Winning claims should be factual and able to be
      proven. The chances of winning or the size of the prize should not be
      exaggerated.


The Advertiser, New Zealand Lotteries Commission, said:

“Receipt of your letter concerning "Complaint 08/525" is acknowledged.

The two complaints referred to in your letter each allege that advertising for New
Zealand Lotteries Commission's ("NZ Lotteries") Lotto Father's Day Promotion 2008
was misleading as the motor cycles referred to in the advertising were not available
as promotion prizes.

I respond to the allegations as follows.

In preparing this promotion NZ Lotteries worked closely with both Harley Davidson
and Harley Davidson's New Zealand supplier, Auckland Motorcycles and Power
Sports, to ensure that the promotional advertising was fair and accurate.

The motorcycle depicted in the advertisement is a Harley Davidson FLSTF Fatboy
motorcycle which is available in New Zealand from Harley Davidson's New Zealand
suppliers.
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The motorcycle image used in the advertising was supplied and authorised by Harley
Davidson.

The retail purchase price in New Zealand of the 2009 FLSTF Fatboy motorcycle,
including GST and all on road costs is $31,240. This price is confirmed in an email
dated 28 July 2008 sent by Harley Davidson's New Zealand supplier to NZ Lotteries
during NZ Lotteries commercial negotiations with Harley Davidson (a copy of the
email is attached).

The polished wheel option costing $550 referred to in the email message was not
pursued and is not depicted.

The promotion advertising included the statement:

      "Terms and conditions apply. See instore or online at mylotto.co.nz for details".

This statement appears at the bottom of the advertisement forwarded under cover of
your letter.

Both complainants are aware of the terms and conditions governing the promotion as
each complainant has referred to the promotion terms and conditions in their written
complaints (a copy of the terms and conditions is attached).

Paragraph 5 of the promotion terms and conditions states that the promotion prizes
consist of:

(a)   "Ten HSV GTS automatic motor vehicles; and
(b)   Ten cash prizes of $31,500 each paid in money by direct credit or cheque
      (such amount being the approximate price of a 2009 Harley Davidson FLSTF
      Fatboy including on road costs). "

It is therefore clear from reading the terms and conditions in conjunction with the
advertising that the relevant prize is $31,500 and not the actual motorcycle. Further,
it is evident from paragraph 5 that the cash prize of $31,500 will enable a prize
winner to purchase the motorcycle depicted in the advertising.

This factually accuracy of the statement, namely that the cash prize represents the
purchase price of the motorcycle depicted, is confirmed in the email message from
Harley Davidson's New Zealand supplier, referred to above.

New Zealand Lotteries preference for lottery and promotional prizes which are prizes
in kind, such as a car, boat, travel or in this case a motorcycle, is to provide prize
winners with the choice of receiving either the prize in kind or taking the cash
equivalent of such prize.

We seek to provide such choice to prize winners when ever possible based on our
extensive experience as to what prize winners want. Therefore, while tangible prizes
in kind prove to be very attractive or motivating to customers when purchasing a
ticket, prize winners have a significant preference for taking a cash equivalent prize
at the time a prize is claimed. This is because prize winners prefer the flexibility of
determining for themselves how to spend a cash equivalent prize rather than
receiving a prize in kind.
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In line with this principle prize winners of the prize in question received a cash prize
of $31,500. In receiving this prize each of the relevant prize winners had the benefit
of choosing between either purchasing the 2009 Harley Davidson FLSTF Fatboy or
spending the prize money they pleased. If a prize winner wished to purchase the
motorcycle NZ Lotteries would have facilitated the transaction with the New Zealand
supplier of these motorcycles.

I confirm that the Lotto Father's Day Promotion 2008 was successfully drawn on 6
September 2008. NZ Lotteries received no complaints from any of the prize winners
that the winners received the cash equivalent prize rather than the motorcycle in
kind.

On this point you will notice that the 10 HSV GTS motor vehicle prizes are offered as
prizes in kind, namely the cars, and not as cash equivalent prizes as occurred with
the Harley Davidson motor cycles. This distinction occurred because the supplier of
the HSV GTS motor vehicles would only allow these cars to be used as prizes if the
vehicles were offered as prizes in kind and not as cash prizes. Therefore to use
these vehicles as prizes NZ Lotteries could not offer a prize which was the cash
equivalent to the price of the car. Prize winners had to receive the car and resell it at
the resale price to the HSV GTS supplier or a third party in order to receive cash for
their prize.

The distinction between the treatment of the Harley Davidson and the HSV GTS
prizes was due to the relative negotiating power of the respective third parties.

Given the popularity of HSV GTS motor vehicle as a promotional prize NZ Lotteries
accepted the limitation of only being able to offer this prize as a prize in kind for this
promotion, as we also occasionally do for other similar prizes.

NZ Lotteries advertising agency is DDB New Zealand Limited based in Auckland. NZ
Lotteries has informed DDB of the complaints and has forwarded a copy of your letter
and this response to DDB. DDB's contact details are: …

Please be aware that it is NZ Lotteries and not DDB who has the commercial
relationship with our prize suppliers such as Harley Davidson's New Zealand
supplier.

In recognition of NZ Lotteries commercial relationships with our prize suppliers I
request that you first notify NZ Lotteries if you wish to contact any such supplier.

In conclusion NZ Lotteries is firmly of the view that the advertising for Lotto Father's
Day Promotion 2008 was not misleading and did not breach the Advertising
Standards Authority Advertising Code of Ethics or the Code for Advertising Gaming
and Gambling. In fact, quite to the contrary, NZ Lotteries was promoting the interests
of the relevant prize winners by providing them with the choice of either purchasing
the motorcycle depicted in the promotion advertising or spending the cash equivalent
of the motorcycle purchase price in a manner determined by each prize winner. In
adopting this approach no harm was caused to NZ Lotteries customers in general or
more specifically to the winners of the relevant prizes.
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I trust this response clarifies the matter. If you require any further information please
do not hesitate to contact me.”


Deliberation

The Complaints Board carefully read the relevant correspondence and the
advertisement. It noted Complainants M. Henderson and M. Baron, were of the view
that the advertisement was misleading where it said “Your dad could win one of 20
boys toys” and pictured a Harley Davidson motorbike.

The Chairman directed the Complaints Board to consider the complaint with
reference to Rule 2 of the Code of Ethics and Principle 3 of the Code for Advertising
Gambling and Gaming. Accordingly, the task before the Complaints Board was to
consider whether the advertisement made any claim, either directly or indirectly,
which was likely to mislead or deceive the consumer. The complaint was also to be
considered with reference to Principle 3, Guideline 3(a) of the Code for Advertising
Gambling and Gaming which states in part that “the size of the prize should not be
exaggerated”.

The Complaints Board noted the advertisement where it said “Your dad could win
one of 20 boys toys. 10 HSV GTS’ + 10 HARLEY DAVIDSONS“. It then noted the
terms and conditions listed in fine print on the back of the advertisement where it
said that the Harley Davidson prizes consisted of “Ten $31,500 cash prizes each
paid in money by direct credit or cheque (with such amount being the approximate
price of a 2009 Harley-Davidson FLSTF Fatboy including on road costs).” It noted
the response from the Advertiser where it said ”If a prize winner wished to purchase
the motorcycle NZ Lotteries would have facilitated the transaction with the New
Zealand supplier of these motorcycles”. The Complaints Board confirmed that prize
draw winners did not actually win a Harley Davidson, but the cash equivalent.

The Complaints Board noted the explanation received from the Advertiser where it
said “prize winners have a significant preference for taking a cash equivalent prize
at the time a prize is claimed” and was of the view that there was no intention to
mislead on behalf of the Advertiser. However, it was of the view that people would
buy the lottery tickets in the hope of actually winning the bike. It noted that Harley
Davidsons were vehicles that many people would like to own, but would not buy for
themselves when faced with a choice as they may feel obliged to spend the prize
money on other financial concerns. Thus the Complaints Board considered there
was a material difference between actually winning the Harley Davidson prize, and
being given a cash equivalent with which they could choose to buy one.

They noted that the fact that the prize was actually given as a cash equivalent was
noted in the terms and conditions. Having established that the offer of the cash was
a lesser offer than that of winning the actual bike, in the Complaint’s Board’s view
this term and condition was one that lessened the value of the offer in the
advertisement. The Complaints Board considered that this condition was not
brought to the attention of the consumer in an obvious way, as it was one of many
clauses printed in small text on the back of the advertisement. As this condition
reduced the value of an offer, and was not brought to the attention of the reader in
an obvious way, the Complaints Board was of the view that the advertisement was
misleading.
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Accordingly, the Complaints Board ruled that the advertisement was in breach of
Rule 2 of the Code of Ethics, and Principle 3 of the Code for Advertising Gambling
and Gaming. It also ruled that as it was of the view that the actual prize had been
exaggerated in the advertisement, the advertisement also breached Principle 3,
Guideline 3(a) of the Code for Advertising Gambling and Gaming.

Accordingly, the Complaints Board ruled to uphold the complaint.

Decision: Complaint Upheld

								
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