The ACCC has instituted proceedings in the Federal Court against Magnamail for allegedly making false or misleading statements in relation to “pre-draw” promotions in Magnamail’s mail order catalogues, and its parent company Direct Group for allegedly being knowingly involved in this conduct.
The ACCC alleges that hundreds of thousands of consumers were sent Magnamail’s attention-grabbing promotional materials which included letters, envelopes, catalogues, and scratch cards.
Between 9 May 2022 and 7 July 2023, in connection with 12 promotions, Magnamail allegedly made misleading statements that if consumers ordered products from its mail order catalogues, they had a right to claim, were eligible for, or had qualified for, a prize which could be valued at up to $10,000, $20,000 or $25,000, or another major prize such as Apple iPads or jewellery.
However, the prizes had already been drawn and at that time no-one except the small number of pre-drawn winners had a right to claim, were eligible for, or had qualified for, a major prize.
“We are very concerned that Magnamail allegedly misled many consumers, some of whom were elderly or vulnerable, and may have enticed them to buy products by representing that they were, at that time, eligible for a major prize, even though they were not,” ACCC Chair Gina Cass-Gottlieb said.
“We allege some consumers paid for products they might not otherwise have ordered, and some became distressed after being led to believe that they were eligible to claim up to $25,000 and then discovering this was false.”
Statements made in the promotions to consumers who had not been pre-drawn to win a major prize included:
- YOU HAVE DEFINITELY WON a prize valued up to $20,000…
- **Congratulations** YOU HAVE WON! This is the Final & Only Notice you will receive by mail before we must award $20,000 cash to the winner.
- $25,000 CASH ON HOLD
- CONGRATULATIONS [title and surname], this means: YOU HAVE QUALIFIED FOR A PRIZE valued up to $10,000 cash!
The statements in the promotions also included words suggesting consumers had been hand-picked for participation in the promotion, were particularly lucky and had greater odds of winning, or needed to act urgently to not miss out.
With respect to scratch card promotions, the ACCC alleges the scratch cards issued to every consumer (including the “lucky number” contained on the cards) were identical, such that scratching to reveal the “lucky number” did not actually increase the likelihood that the consumer had won a major prize.
“We are taking this action after being contacted by many consumers who received this promotional material and complained about their experience,” Ms Cass-Gottlieb said.
“We allege Magnamail already had the results of the pre-draw when it decided to send the promotional materials to hundreds of thousands of consumers who were not, at that time, eligible to claim a major prize.”
The ACCC also alleges Magnamail’s parent company Direct Group, one of the largest mail order and direct-to-consumer retailers in Australia, was knowingly involved in Magnamail’s alleged conduct.
“Businesses running game or draw style promotions are on notice that they must not make statements that mislead consumers about whether consumers are eligible for particular prizes,” Ms Cass-Gottlieb said.
The ACCC is seeking declarations, penalties, costs, injunctions, and other orders.
Background
Magnamail Pty Ltd is a direct mail order catalogue business operating in Australia and New Zealand that sells a range of merchandise through catalogues it distributes to the public.
Magnamail is owned by Direct Group Pty Ltd, which also owns many other brands or publications such as Reader’s Digest, Over Sixty, Infashion, House of Pets, and TVSN (Television Shopping Network), a shopping network channel that broadcasts on free-to-air TV and subscription services such as Foxtel.
Magnamail selects consumers to be sent promotional material from its database of previous customers and customer databases held by other Direct Group brands.
Example of Magnamail’s promotional catalogue cover:
Example of Magnamail’s Scratch Card:
Scratch card promotion in which the ACCC alleges each scratch card was identical, such that scratching to reveal the “lucky number” did not actually increase the likelihood that the consumer had won a major prize. Below is a card which has already been scratched, revealing the “lucky number”.
Example of Magnamail’s Envelope:
Envelope allegedly creating a sense of urgency to act now as a “GUARANTEED WINNER” in Magnamail’s promotion.
Concise statement
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This document contains the ACCC’s initiating court document in relation to this matter. We will not be uploading further documents in the event these initial documents are subsequently amended.
