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The rise of the internet has meant that social media is paramount to any business’ marketing strategy. A great way to promote your business or goods and services is by running a competition via your social media channels. Such competitions create excitement for your business and your products whilst getting your customers involved. Given the ease of use of social media, and the online arena within which social media campaigns operate, businesses need to realise that competitions run on social media must comply with regulatory requirements. This article will discuss the often-forgotten legal considerations when running a competition via social media.
Regulatory Considerations
Different rules and regulations will apply to your competition depending on which state the competition will operate in and the type of competition. Competitions can be games of chance or skill. Competitions are a game of chance if you randomly select a winner from a pool of entrants, and no skill level is required to enter. For example, suppose you run a competition that requires an entrant to follow your Instagram and like your Facebook page. Here, their entry into the draw is a game of chance. In contrast, a game of skill requires entrants to perform selected skills to enter the competition. For example, a competition that requires an entrant to answer a specific question in 300 words or less.
If you are running a game of chance, you may require permits to operate in certain states or territories. For competitions operating across several states or nationally, you must comply with the rules and regulations of every state within which your competition is operating. Depending on the value of the competition prize, you may require a permit in:
- New South Wales;
- South Australia;
- Northern Territory; and
- the Australian Capital Territory.
In addition to permits, the regulations may set out:
- the timeframe for awarding a prize;
- how you complete a draw;
- how you must contact winners;
- how results must be published; and
- whether certain prizes are prohibited.
Terms and Conditions
Even though you are running on social media, you need to have complete Terms and Conditions in place setting out the rules of the competition (Competition Terms and Conditions), separate from your standard Terms and Conditions for the provision of goods and services. Any post marketing your competition on social media should also include a link to your Competition Terms and Conditions.
Here are some things to consider when preparing your Terms and Conditions.
Entry Requirements
Consider how customers enter your competition. This includes whether they need to provide you with certain information when entering.
Eligibility Criteria
Consider whether there are any minimum requirements that entrants must meet. For example, you may impose a particular age to enter. Furthermore, consider whether you are excluding anyone from entering your competition.
Competition Period
This refers to the competition’s starting and ending date.
Prize
Determine the prize you will award the winner. Additionally, consider whether you will allow the winner to transfer the prize to another person. Alternatively, ensure your terms outline whether the winner may wish to exchange or redeem the prize for cash.
Award Date and Procedure
Consider how you will award the prize. If it is a game of chance and operating as a draw, specify how you will conduct it. For example, this may involve a computerised drawing mechanism. Additionally, specify when you will award the prize to the winner.
Notification Details
Specify how you will notify the winner. For example, they may need to claim their prize within a certain period. Furthermore, certain states may require you to publish the results of a competition publicly. If this is the case, determine where you will publish details regarding the winner.
This fact sheet outlines what records you need to keep when you run a trade promotion for each state and territory, and what documents you should keep.
Redraw Details
Suppose the winner does not claim their prize. If so, consider whether you wish to host a redraw and, if so, provide details.
Permits
If you operate in a state where permits are required, your Terms and Conditions must clearly state the permit numbers.
Disclaimer
Most social media sites will also need some sort of disclaimer, both in your Competition Terms and Conditions and in any post promoting the competition, that the competition is not affiliated with or endorsed by that particular social media site.
Continue reading this article below the formKey Takeaways
Social media competitions are a great way to bring attention to your brand and get your customers involved in promoting your business. Even though your competition is running on social media, it must still comply with regulations and have appropriate Terms and Conditions in place. Given the various aspects of a competition governed by regulations, you must understand how any regulations will apply to your specific competition.
If you need help complying with your legal obligations when running a competition on social media, our experienced competition lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Yes. Even if you are running your competition on social media, you must still comply with all regulatory requirements and have appropriate Terms and Conditions in place. Any post marketing your competition should include a link to your Terms and Conditions so all entrants know they apply.
Potentially. Different states have different rules and regulations relating to the operation of competitions. Some states may require you to have permits, and if you’re operating in more than one state, you may need more than one permit.
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