Operators charged over unfair bonus terms as CMA gets tough

The Competition and Markets Authority (CMA) is launching enforcement action against a number of online gambling operators suspected of breaking consumer law with their labyrinthine bonus terms and conditions.

As part of an ongoing investigation, the CMA is acting because it believes people aren’t getting the deal they expect from sign-up promotions and operators are unfairly holding on to people’s money. The identity of the operators facing enforcement action has not yet been disclosed.

This follows a joint programme of work between the Gambling Commission and the CMA to tackle a shared concern about whether people are being treated fairly by online gambling operators.

Nisha Arora, CMA Senior Director for Consumer Enforcement, said: “We know online gambling is always going to be risky, but firms must also play fair. People should get the deal they’re expecting if they sign up to a promotion, and be able to walk away with their money when they want to.

“Sadly, we have heard this isn’t always the case. New customers are being enticed by tempting promotions only to find the dice are loaded against them. And players can find a whole host of hurdles in their way when they want to withdraw their money.

“That’s why we are today launching enforcement action where we think the law has been broken. We are also asking people who have had difficulties withdrawing their money when they’ve gambled online to tell us about it, and help probe this issue even further.”

The CMA is concerned that people often don’t get the deal they are expecting as sign-up promotions come with an array of terms and conditions that are often confusing and unclear and, in some cases, may be unfair. The CMA said that customers might have to play hundreds of times before they are allowed to withdraw any money, so they don’t have the choice to quit while they’re ahead and walk away with their winnings when they want to.

Even when players haven’t signed up for a promotion, there are concerns that some operators are stopping customers taking money out of their accounts. The CMA has been told by customers that some firms have minimum withdrawal amounts far bigger than the original deposit, or place hurdles in the way of them withdrawing their money.

Gambling Commission Chief Executive Sarah Harrison commented: “Gambling operators must treat customers fairly – but some have been relying on terms that are unclear with too many strings attached.

“Whilst the CMA takes enforcement action on how consumer legislation is followed, the gambling industry should be under no illusion that if they don’t comply with consumer law, we will see this as a breach of their operating licence, and take decisive action.”

The CMA opened an investigation into the gambling sector’s compliance with consumer protection law towards the end of last year after hearing about a range of concerns that suggested some operators were not treating their customers fairly. As well as hearing from around 800 unhappy customers, it has also demanded companies answer questions about how they operate, and closely examined the play on a range of websites.

Having identified a number of operators engaging in practices likely to be breaking consumer law, the CMA is now taking enforcement action and has a range of powers at its disposal to bring any illegal activities to an end.

This investigation is part of a joint programme of work with the Gambling Commission to tackle issues around fairness and transparency in the gambling industry. As well as the enforcement cases, the investigation may lead to further action, from the CMA or the Gambling Commission, to improve practices across the online gambling sector.

In addition to this enforcement action, the CMA is now opening a new line of investigation into unfair terms and practices that could restrict customers’ rights to withdraw money in their online gaming and betting accounts. Gambling operators are required to check their customers’ identities to fulfil both their social responsibility and anti-money laundering (AML) requirements. However, concerns have been raised that some operators may be applying these requirements in a restrictive way, preventing consumers from legitimately withdrawing funds from their gambling accounts.

Harrison added: “Identity checks are an important duty on the industry to prevent money laundering and to ensure responsible gambling. Where operators haven’t met those obligations, we have taken clear action.

“However, those checks cannot be used as an excuse to unduly restrict legitimate customers from withdrawing their funds. If the CMA finds specific consumer protection failings in this area, it will add further cause for the Commission to review how fairly operators are treating consumers.”

Among the areas that the CMA is specifically looking at include:

• terms preventing players from withdrawing any money they have deposited in their account unless they have wagered its value through in full once, or several times
• requirements for players to take part in publicity or advertising activity for a firm before the player can withdraw their winnings, for example, by posing for a photo with a ‘winner’s cheque’ which is then displayed on the firm’s website
• unreasonably high minimum withdrawal limits, for example, someone might add a £5 deposit but the minimum they can withdraw is £25, so they have to win 5 times their original deposit before they can take out their winnings
• daily, weekly or monthly withdrawal limits that appear unreasonably low, for example, compared to the amount that can be deposited and bet over the same period, so someone might have won £10,000, but can only withdraw £1,000 a week
• terms that place arbitrary deadlines on the time given to players to provide information to verify their identity as a condition of withdrawal

The CMA says it has also identified concerns with some firms where players do not make a withdrawal or place a bet over a number of weeks or months. In particular, some firms have terms which apply ‘dormancy’ charges to players’ accounts after a period of inactivity, or terms which remove all funds from inactive accounts, regardless of the size of the balance.

It commented: “If we identify firms who we think are breaking the law in relation to these issues, we will take further enforcement action.”