Denmark’s Consumer Ombudsman has reported private lottery brokerage operator Lotto24.dk to the police over allegations that the company used misleading marketing practices to attract customers.
Lotto24.dk, unrelated to Germany’s listed lottery brokerage operator Lotto24, ran promotional campaigns which offered a gift for all those who entered a DKK25,000 (€3,500) prize draw.
Customers participated by making a payment of DKK1 for a 14-day membership and answering a number of marketing questions.
However, once the 14-day membership came to an end, the customer would then automatically be charged DKK299 for a monthly subscription to the website, in breach of Danish consumer protection laws which state that when an offer is linked to a subscription offer it must be stated clearly in marketing communications.
The website informed customers at the bottom of the page that taking part in the competition would automatically subscribe them to the Lotto24.dk website, which the Ombudsman said was hidden away with images of free gifts such as cases of beer or shop vouchers featuring prominently.
It prompted seven complaints from consumers after running from May 2012 to June this year, all of whom have since been refunded.
Ombudsman Henrik Øe said: “If a trader makes a campaign with the aim of selling subscriptions, it must appear clearly on the marketing. Registration for current payment is very important information which is vital for consumers’ assessment of the promotional offer. Such a condition cannot be hidden among less important or ambiguous information.”
Lotto24.dk acknowledged that the its marketing communications in thirteen of its campaigns were misleading, marking the second time the company’s advertising campaigns have been found to be in breach of Danish law after it was fined DKK6,000 last March, again for running misleading marketing communications.
As a result of the police investigation, Swedish regulator Lotteriinspektionen has been notified of the potential criminal activity by the Danish Gambling Authority, as the company is also active in the Swedish market through its Lotteri24.se site.
However, it remains unclear what action will be taken by the regulators, with the Lotteriinspektionen stating that as Lotto24.dk is registered in Denmark its activities are governed under Danish law.