Mercury investigated after free calls fiasco

Mercury's promotion offering unlimited free phone calls on Christmas Day is being investigated by the Consumers' Association after thousands of people failed to get through.

The company had promised that anyone buying its One-2-One mobile telephones after 8 November would be entitled to unlimited free calls on Christmas Day. However, massive demand meant many callers were unable to get through. Mercury reported that at least20 people had spent more than 12 hours on the telephone.

The Consumers' Association added its voice yesterday to concerns about the promotion. Responding to complaints, the association is investigating a similar promotion in the period leading up to Christmas.

The association said people had bought Mercury One-2-One phones on the promise that there would be free off-peak local calls, but they had been unable to get lines "either because they were too busy or because some areas were not covered by the network".

All promotions in Britain are governed by the British Code of Sales Promotion Practice, a voluntary set of rules policed by the Advertising Standards Authority. There are legal sanctions in the Trade Descriptions Act 1968, the Misrepresentation Act 1967 and the Lotteries and Amusements Act 1976.

As in the case of the Hoover "free flights" give-away last year, the Mercury chaos has more to do with failure to predict the level of interest than any attempt to mislead. The Hoover promotion, in which customers could receive flights worth up to £400 in return for buying a £119 appliance, attracted more than double the anticipated applications and led to the dismissal of three senior managers and a $30m (£19m) provision to cover its costs. Apart from failing to take out insurance, Hoover's biggest mistake was to offer too good a bargain.

Occasionally, events conspire to drive a truck through the best-laid promotional plans. To coincide with the Los Angeles Olympic Games in 1984, McDonald's gave customers cards carrying the name of a games event. If America won gold in the event, the cardholder won a prize. Unfortunately for McDonald's, most of Eastern Europe boycotted and the US won rather more golds than forecast.

The same year, Cadbury buried golden eggs across the country in the Creme Egg Treasure Hunt. Enthusiasm was so high among some captivated contestants that ancient sites were dug up.

Unlike the Hoover promotion, Mercury's free offer was pitched less at inducing consumers to make purchases they had not intended than at luring those already contemplating entering the fiercely competitive mobile phone market. Operators spent £80m on advertising to recruit 750,000 new users by Boxing Day, placing the mobile phone alongside toy models of the Power Rangers television characters as the most popular Christmas present.

With the industry forecasting 12 million subscribers by the end of the century, consumer groups will be watching closely to ensure that networks are in place to handle them.