Housing raffle in trouble for withholding £650,000 London flat

30 October 2019

Players in a lottery that promoted winning a £650,000 flat in London were misled by adverts suggesting winners would actually receive a property, it has been ruled

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Raffle House advertised its scheme across emails, a website and sponsored posts on Facebook during summer 2019, telling ticket buyers “A £650,000 London flat yours for £5”.

Details of a “previous winner” were given, who, a Facebook post said, had “her life changed through Raffle House”, asking “Will you be next?” and stating “Live in London for a tenner”.

The Advertising Standards Authority (ASA) found these claims and offers were misleading, however, as the previous winner had not in fact received a property, or a reasonable equivalent.

They had instead been given a cash prize of £173,012.93, less than 27% of the advertised property’s value and less than 43% of the total amount generated by the competition. See the original advert below:

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In its defence Raffle House, founded by entrepreneur Benno Spencer and supported by Brian Mattingley, chairman of gambling brand 888, said the cash prize was won at significantly better odds than described for the property jackpot prize, and so was a reasonable equivalent.

It claimed it was clearly displayed on the website’s home page and elsewhere that the ticket sales threshold had to be reached to award the property, otherwise the prize was one of cash.

Raffle House added customers were informed how many entrants were required to guarantee the property as the main prize throughout the competition, and in one of the complained about adverts, which stated 6,500 more raffle players would guarantee it as the jackpot.

The ASA disagreed and upheld the complaints it had received about the promotion and Raffle House.

In its decision it stated “we considered the incentive for entering the promotion was winning the £650,000 flat in London”, and as such that is what Raffle House should have delivered.

“Given the number of references to the property, we did not consider that [the cash prize] overrode the impression created that the purpose of entering the competition was to be in with a chance of winning the property,” it continued.

In a warning to other similar schemes the ASA added: “We considered that any promoter who needed to generate sufficient revenue from the competition to fund the advertised prizes was likely to breach the Code if they failed to sell the requisite number of tickets.”

Raffle House has been ordered by the ASA to ensure in future that they award the prizes as described in their marketing communications or reasonable equivalents, “and that their future advertising did not mislead by exaggerating the value of a prize that had been previously awarded”.

Moneywise approached Raffle House for comment. Mr Spencer says: “We’re now less than 20,000 entrants away from our 60,000 ticket threshold and confident that we’ll be awarding our current property in three months.

"Following our first competition, where we awarded a life-changing £173,000, we’ve taken steps to ensure that our more than 40,000 users have the chance to win the £500,000 London flat currently on offer for £10, as well as our weekly £1,000 cash-prizes, all the while continuing to raise money for our homelessness charity partners.

"Our winners’ list continues to grow and we can’t wait to add a homeowner to it soon.”

The company is not the first to get in trouble for offering a misleading property lottery to hopeful ticket buyers.

A Moneywise investigation this year found rising numbers of homes are being raffled rather than sold through conventional means, but entrants are often left disappointed.

In the 18 months to April, competition website Loquax had listed 50 house competitions. Only two of these resulted in anyone winning a property, one of which was a community project in Ireland.

In more than 70% of cases a cash prize was awarded, usually worth far less than the estimated property value. In some cases, the winner receives just a few thousand pounds because the raffle didn’t sell enough tickets.

Speaking to Moneywise in April, Mr Spencer said of Raffle House: “It looks shambolic and badly planned, but we are committed to awarding a property. The business would struggle to do anything again if we didn’t. We hope to be a UK first.”

When things go wrong, ticket buyers are often left unable to contact the raffle organisers, with the company behind the scheme vanishing.

Consumers can complain to the ASA, which can order the promoter not to repeat a breach, but otherwise consumers have little recourse to get their money back.

The ASA told Moneywise it has seen a rise in property raffle grievances and found many in breach of the Committees of Advertising Practice code for changing closing dates, adjusting Ts&Cs, withholding the prize advertised or offering significantly lower-value cash prizes.

Complaints have been upheld against Homeraffler.com, Real Hot Property, HMV Competitions and Win Your Dream Home.

Many companies have been discontinued, dissolved or struck off Companies House for not providing annual accounts after failing to sell enough tickets.

Images courtesy of the Advertising Standards Authority

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