In a slightly tenuous link…sometimes ‘free’ is free, sometimes ‘free’ actually comes at a price. There are lots of ‘free to enter’ competitions – on pack promotions, online competitions and prize draws on Facebook and websites. Now more than ever, businesses and marketing teams are looking at ways of encouraging people back in and competitions are a great way to engage with people – but it’s essential to stay within the law.
You need watertight terms and conditions which meet regulatory requirements.
Be clear that what you are offering constitutes a prize draw. Prize draws can be run for commercial or private gain, allowing companies to offer prizes or promote products. However, it is easy to cross the boundaries of a prize draw and offer a lottery, which without the correct measures can be illegal.
What is a prize draw?
A prize draw is where the outcome is determined by the application of skill, judgement or knowledge. Businesses may require the participant to answer a simple question to enter. You must be careful not to set your skills question at a level that would deter a significant proportion of people from being able to enter, and you must ensure the answer can be easily sourced. In other words, you must make the competition fair, equal and open to everybody. Failure to follow these rules can mean your competition falls outside the boundaries of a prize draw and into illegal gambling.
What constitutes a lottery?
A lottery is a competition where the participant is required to pay to enter, there is at least one prize up for grabs and prizes are allocated wholly by chance. Everyday examples of lotteries include raffles, tombolas and sweepstakes. Lotteries are heavily regulated under the Gambling Act 2005 and for some lotteries a licence is required. If applicable, not having the correct licence in place can be deemed an offence and can lead to criminal prosecution, so we recommend that you seek professional advice when setting up a competition.
How to avoid pitfalls
– Clearly outline how to enter – ensure you identify any costs or factors that are likely to influence the participants understanding of the competition.
– Identify the ways in which the participant can enter – if the competition is going to be available on different social media platforms, make this clear.
– Outline any restrictions or limitations – such as an age, date, number of entries or geographical restrictions.
– Start date/closing date – to prevent participants attempting to claim after the competition has ended, always place a start and end date into the terms.
– Proof of purchase – if proof of purchase is required to successfully enter the competition, ensure to state this clearly.
– Time/Space – where your competition is limited by time and/or space it is important to identify to the participant how they can access the full terms and conditions. The most common method is by directing them to a webpage. It is important that participants should be able to retain those terms or easily access them throughout the competition.
– How and when winners will be notified – participants will need to know how they will be notified if they are successful. It is a good practice to also set a cut-off date for the winner to claim any prizes e.g. 28 days from winner being announced.
– When prize winners will receive their prizes – it is important to be clear to participants the method in which they will receive their prize e.g. post/collection only. This could affect whether a participant wishes to enter a competition and therefore must be clearly stated.
– Any intention to use winners in publicity– you will need their consent. Getting consent can be incorporated into your terms meaning permission is granted when the participant accepts the terms by which to enter.
– Get your terms checked over prior to publishing – it is always best to seek legal advice prior to publishing. If you do, at any point, find a need to amend the terms, it is important that you notify the changes to those who have already
Whether you have questions on setting up a prize draw or would like your current T & Cs to be reviewed, the Corporate and Commercial team at Wilson Browne Solicitors are able to provide professional and friendly advice on all matters.
For an initial no obligation discussion contact Duncan Crowther on 01536 218888 or by email at firstname.lastname@example.org