Representative: To the company. This is your payment for the subscription.
Researcher: But does the money go to the lottery or do you take something from it for yourself?
Representative: For the lottery. Only for the lottery. Only the winning, okay? I'm going back again. The 119th is just so you can have lotteries. A lottery subscription. Okay? Only when you win and it doesn't matter what, 100 shekels, 200 shekels, 10% for the company, all the winnings are yours."
A similar impression emerges from the words of the same service representative in a phone conversation with another researcher:
"Researcher: Yes. I have a question. What do you actually get out of this?
Representative: As soon as our customer wins, then like this, it's 10% for the company and all the winnings are for the customer. 90% is for the customer, 10% for the company.
Researcher: And if it's a group, then it's actually divided.
Representative: The same. We don't take anything more than 10%.
Researcher: Beautiful.
Representative: That's all.
Researcher: And 90%?
Representative: We live on your winnings, the customers' winnings. Do you understand?"
However, contrary to the representative's statements, which imply that the Respondent dedicates the entire subscription fee to the purchase of lottery tickets, and its profits derive only from the distribution of the winnings, the reality is different. From the data provided by the Respondent itself, it appears that the rate of the subscription fee used for the purchase of lottery tickets is between 27% and 65%, depending on the route of participation. The balance is not used for the purchase of lottery tickets. Here, too, the figure is not presented to the customer.
Respondent 7 - Smart Winners
- As stated, respondent 7 did not take an active part in the proceeding, other than a reply that it submitted together with respondents 1, 2 and 5. According to what is stated on the website and in the regulations of this respondent, as attached to the application for approval, it offers group participation in the lottery lotteries as part of a monthly or periodic subscription and even as part of a one-time participation. The respondent specifies the number of lottery tickets that will be submitted, the price for participation in the lottery within the group and the size of the group. The respondent's bylaws clarify that in the event of winning a prize with group participation, the respondent will collect 10% of the prize "for handling the win and for the express purpose of using these funds in the future for the purpose of purchasing valuable prizes that will be distributed within the framework of the Smart Club lotteries". The regulations or the website do not mention anything about the rate of the subscription fee used to purchase lottery tickets and the rate that is considered a "commission".
- According to the calculation in Dr. Regev's opinion, which was not contradicted by the Respondent, only 17% - 28% of the subscription fees paid to the Respondent are used for the purchase of lottery tickets. Her words were not contradicted and it appears that even with this Respondent, the vast majority of the subscription fees are not used for the purchase of lottery tickets, without this information being presented to the customer.
Respondent 8 - New Sport and Marketing
- Respondent 8 also offers its customers group participation in the Mifal HaPais lotteries in a number of tracks. The Respondent's website contains information about the tracks, including that in the event of winning the prize, the Respondent is entitled to 10% of it. The size of the group and the price of the subscription do not appear on the website, and it appears that in order to make an actual purchase, a telephone conversation with representatives of this Respondent is required. According to the Respondent's data, about 45% of the subscription fees paid to the Respondent are used to purchase lottery tickets.
- In contrast to the other respondents, respondent 8 includes in its terms of engagement a reference to the rate of commissions. The regulations state that "the charge rate for the service of sending the group forms on the website, which will apply to the user, will vary according to the cost of the program. The site's management is entitled to change the fee for sending the forms from time to time. The billing rate and the commission will be displayed on the transaction confirmation page as one amount." This section contains a link to another page in which the information about the billing rate and the commission appears. In relation to each track, the respondent specifies which amount is designated for the "service" and which amount is a "forms deposit".
- The Applicant agrees that this section of the Regulations constitutes the disclosure of material information regarding the value of the forms. However, she claims that the Respondent disclosed this information at the earliest in 2017, and the claim of deception should be discussed in relation to the years prior to the date of disclosure.
- The Applicant bases this argument on a letter submitted by the Respondent's accountant in which he wrote that according to his recommendation, the Company specifies in the Company's articles of association the mix of costs within the framework of the subscription. In the examination of the declarant on behalf of the Respondent, Mr. Shmuel Levy, he estimated that the Respondent began to use the services of the accountant who wrote the letter between the years 2017 and 2020. From this, the Applicant concludes that the disclosure of the mix of costs within the framework of the subscription began in 2017 at the earliest. I accept the Applicant's argument that this indication is sufficient to meet the required burden at the stage of the motion to certify the class action, when at the stage of the hearing of the claim itself it will become clear exactly when the Respondent began to disclose the information.
- In summary: As appears from the material presented, respondents 1, 2, 6 and 7 do not present the customer with any information regarding the part of the subscription fee used for the purchase of lottery tickets and the part used as a commission. This is despite the fact that in practice most of the subscription fees are not used for the purchase of lottery tickets, but rather it is a "commission"; Respondent 5 noted to customers who asked that the payment included a service fee, but the details provided to the customers were not accurate; Respondent 8 currently states in the terms of engagement the rate of the subscription fee used to purchase tickets, but there is a prima facie real claim that at least until 2017 the information was not visible to the customers.
Discussion of the first cause of deception
- According to the Applicant, by not presenting to the consumer the amount of the subscription fee used to purchase lottery tickets, they are refraining from fulfilling their duty to provide consumers with information about a material interest in the transaction, and thus violate the provision of section 2 of the Consumer Protection Law, which prohibits deception.
- I am of the opinion that there is a reasonable chance that in the main proceeding this argument will be decided in favor of the class members.
- The Respondents offer their customers subscriptions to participate in lotteries held by the National Lottery. The subscribers market to the customers while creating the impression that participation in the lotteries of the Lottery through the services of the Respondents is worthwhile, efficient and preferable to participating in lotteries directly through the Lottery.
- Thus, for example, and for the purpose of a non-exhaustive demonstration, Respondent 1 uses the slogan "Catch the Method, Win Millions!" and testifies to itself on its website that "Lotto is the preferred choice for sending lottery and Toto lotteries"; Respondent 2 states on its website that "only with us will you receive a selection of packages that greatly improve the chances of winning" and that "group purchase of lottery tickets greatly improves the chances of winning"; Respondent 5's website states that "your number combinations are sent systematically and persistently, and in this way we significantly increase your chances of winning"; Respondent 6 declares on its website to its customers that "the company invests a lot of money for you every week in order to have more chances of winning and more money winnings in the lottery"; Respondent 7 states on its website that "team lottery games have proven themselves to be a winning method. In fact, members of group lotteries win 25% of all lottery games"; and on Respondent 8's website, it is stated that "there are quite a few lottery methods, but we at WinWin offer the most worthwhile, profitable and easiest way to understand."
- Almost all of the respondents also boast of using special mathematical and statistical methods that improve the chances of winning lotteries, another factor that may create the impression that participating in the lottery lotteries through the services of the respondents is preferable and worthwhile (the question of whether the respondents actually use such methods and whether this is a deception regarding the content of the lottery itself, I will address it at length below).
- However, contrary to promises and declarations, the respondents offer customers participation in lotteries in a way that the consumer's preference is not at all clear.
- In this context, we will explain and distinguish between three concepts: chances of winning; expectation of winning; and the expectation of profit:
The chance of winning is the chance of winning some prize. For example, if one out of every 100 lottery tickets wins, the chances of winning are 1%;