How to avoid copping a fine when running your Christmas competition or giveaway

O*NO! It’s almost December and your business still hasn’t launched a holiday season promotion.

Your aim might be to increase brand awareness, launch a particular product or service, re-engage your client base, or grow your social media followers. But did you know that certain competitions & giveaways require you to obtain a permit or licence from State lottery departments, and that there are huge penalties involved if you don’t?

Here are the key things to consider when running your business competition, whether online or through social media, so you don’t get caught out.

The information you provide must be accurate

You must advertise your promotion accurately and provide as much information regarding the prizes as possible. Once advertised, you should not change the rules, as you must stick by the promises you make to your clients and audience.  All trade promotions or competitions in Australia are subject to the Australian Consumer Law.

Trade competitions must not involve conduct that is likely to mislead or deceive, which means you must disclose details of any relevant conditions or limitations before entry – so you must nail these in your T&Cs.

If you do not provide accurate information, or you make any false or misleading statements (including not offering prizes as promised), then there are large penalties at play. The message here is walk the walk and talk the talk – deliver what you promise.

What rules apply to your competition or give away?

Each State or Territory has different rules and regulations. If your competition or give away is open to residents of a particular jurisdiction (aka State or Territory), then you would need to check the laws in that jurisdiction. If it’s a national promotion, then you will need to check the laws in each jurisdiction.

What difference does it make if your promotion is a game of chance vs a game of skill?

These are the two main categories of trade competitions: 

• Games of chance: are competitions such as prize draws that require a random draw to pick the winner/s, where there is an element of chance in selecting the winner.

• Games of skill: are contests judged upon merit where the entry usually requires creativity, like ‘tell us why you should win’ or a photo/caption comp. A game of skill must be based on the entrants submitting original entries – not where they must submit a ‘correct’ answer.

When running a game of chance, you do need to check the rules in each jurisdiction as there may be some extra red tape, based on the value of the prize pool. If the prize is over a certain value, then you would usually need to apply for a permit or licence.

For games of chance, the current permit requirements are:

• NSW if the prizes are over $10,000;

• ACT if the prizes are over $3,000;

• SA if the prizes are over $5,000;

• NT if the prizes are over $5,000 (unless you have a permit in another jurisdiction).

For other States and Territories, permits are generally not required.

Games of skill are less regulated than games of chance and will not require any permits to run. But it is still important that your conditions abide by the regulations. You must clearly publicise the criteria on which the entries will be judged, and the winner must be chosen based on these criteria. There will also be rules about how you publish the names of the winners.

Promoting through Socials

Lastly, if you are promoting your competition on social media, each platform has its own rules.

The general gist is that you should always link to your own T&Cs, and not imply that the social media company endorses or is associated with your competition.

Facebook’s rules require you to:

• Link to your competition’s terms and conditions

• Sort your licence and permit requirements

• Include statements releasing Facebook from association and liability.

• Avoid asking people to tag their friends, share on their timeline, or share on their friends’ timeline to enter.

Insta rules are similar, but there’s nothing against tagging or sharing as a means of entry. Just don’t ask people to tag themselves in photos they’re not in, or otherwise inaccurately tag photos.

Twitter, YouTube … and the rest all have their own promotional guidelines.

Takeaway

• Know the rules under which your competition or giveaway needs to comply.

• Always publish promotional T&Cs in compliance with the relevant jurisdiction/s.

• Check your social media platform guidelines.

• Consider whether winners will be chosen at random (chance) or upon merit (skill).

• If a game of chance, work out whether you need to apply for a licence or permit, based on the value of the prize

• If you do need a permit, each state has their own application process. Allow plenty of time for your applications to be approved. You also need to have your T&Cs ready to submit to the relevant authority at the application stage.

The biggest takeaway we can give you is to design your promotion as a game of skill, or under the thresholds above if a game of chance, so you do not have to jump through the hoops of applying for a permit or licence.

Your next steps

You might already know the details of your competition’s budget, prize, and entry method, and want to work out what you need to do in order to be legally legit. Book a FREE 10 min chat with us today to discuss sorting your promotion’s legal requirements or terms and conditions.

Boring legal stuff: This article is general information only and cannot be regarded as legal, financial or accounting advice as it does not take into account your personal circumstances. For tailored advice, please contact us. PS - congratulations if you have read this far, you must love legal disclaimers or are a sucker for punishment.