Mail order mayhem: ACCC acts

There’s an old saying: “If it seems too good to be true, it probably is.” In today’s world, where scammers seem to come at us from all directions, those words are more relevant than ever. So it has proved to be with a mail order company accused of misrepresentation to thousands of Australians.

The mail order company is Magnamail, a name probably not familiar to most Aussies. However, many will be familiar with other brands owned by its parent company, Direct Group. These include Reader’s Digest and TVSN (Television Shopping Network).

Magnamail has had proceedings instituted against it by the Australian Consumer and Competition Commission (ACCC), alleging false or misleading statements. The allegations relate to ‘pre-draw’ promotions in Magnamail’s mail order catalogues. The ACCC alleges that parent company Direct Group was knowingly involved in this conduct.

Mail order misrepresentation

According to the ACCC, the misleading behaviour occurred between May 2022 and July 2023. It involved the physical bulk mail-out of catalogues and scratch cards inside envelopes claiming, “YOU HAVE WON!”

Both the catalogue and the scratch card inside reiterate the ‘fact’ that you’ve won. However, it’s alleged the prizes were drawn by the time the mail was delivered. At that time only a small number of already pre-drawn winners had a right to claim a major prize.

It is also alleged some consumers paid for products they might not otherwise have ordered if not for the promotion. 

ACCC chair Gina Cass-Gottlieb said many vulnerable and elderly were swept up in the targeted action. “We are very concerned that Magnamail allegedly misled many consumers, some of whom were elderly or vulnerable,” Ms Cass-Gottlieb said. She said the mail order company “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”.

Ms Cass-Gottlieb went on to say: “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.”

The statements made in the promotions to consumers who were not 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!

An oldie but a goodie

The ACCC has provided images of the mail order envelopes, catalogues and scratch cards used in the alleged misrepresentation, as seen here:

The ACCC alleges the scratch cards issued to every consumer (including the ‘lucky number’ contained on the cards) were identical. Specifically, scratching to reveal the ‘lucky number’ did not increase the likelihood that the consumer had won a major prize.

Ms Cass-Gottlieb said the ACCC would be targeting any companies who adopted tactics such as this in future. “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,” she said.

The ACCC’s initiating court document in relation to the proceedings can be viewed here.

Have you received mail order promotional material similar to that highlighted by the ACCC? What did you do with it? Let us know via the comments section below.

Also read: Extortion scam warning

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