Why giving away free stuff isn’t so simple

Social media competitions are a great way to grab attention. But laws that control these competitions can catch you on the hop.

Who doesn’t like a punt or a chance to win free stuff? Running a competition on Facebook or Instagram can easily engage new customers.

When people tag their mates in the competition – hey presto! You’ve got more contacts to hear about your business.

Just a sec, it’s not that simple.

Laws and conditions are in place that affect where you run the competition, who’s eligible and how big is the prize.

The first question to ask is: What sort of competition are you running?


Trade promotions and the law


Legally, there are two types of competitions you can run – they’re  known as ‘trade promotions’. There’s the game of chance and there’s the game of skill.

A game of chance is where participants enter a competition that offers a random chance of winning. Like choosing a name out of a hat for the Melbourne Cup sweepstakes.

A game of skill awards a participant based on their skill. This can be a vote. Think ‘the best answer wins’ or ‘tell us in 25 words or less’.

Here’s the rub – each state and territory has different guidelines for these two types of competitions.


State or territory competition rules


Your starting point is where your business is based. Then you know what state or territory guidelines to follow.

Games of skill are less fiddly with the paperwork.  You need a permit when running a game of chance in some jurisdictions. And depending on that humdinger of a prize, its value affects how you comply with the law.

Here are the links to each state or territory’s rules below, so make sure you’re armed with the facts before running a competition. There are different rules in different states and territories when it comes to trade promotions:

ACT

Queensland

NSW

NT

South Australia

Tasmania

Victoria

Western Australia

If you’re running a game Australia-wide, your competition needs to tick all the rules stated by each region.

Once all those relevant rules are met, check the fine print on your chosen social media platform’s terms and conditions.


Competition fine print on Facebook and other platforms


“Tag your mate to win” is a no-no for Facebook’s terms and conditions (Section E, subsection 3). This platform sets out the ABCs of what competitions can appear. This includes the terms and conditions for your competition entry form (which can be a link on your social media post).

An example of one of the Facebook competitions MYOB has run in the past

7 tips for writing your competition’s terms and conditions


Be perfectly clear about:

  1. who’s running the competition – is it an individual or a business?
  2. what the prize is
  3. who can enter the competition
  4. how the winner(s) will be selected
  5. how long the competition will run
  6. what circumstances can disqualify a person from participating
  7. what the legal requirements are

Then you’ll keep the relevant area’s lawmakers happy. You can avoid more red tape by limiting which states or territories are involved. Your terms and conditions in the post needs to say people from these regions aren’t eligible.

There’s no cookie cut-out version for every competition. But there are templates available to help you draft your own terms and conditions. Seeking legal advice takes the pressure off and brings peace of mind – especially for your first competition.

If all this information has you huddling under the doona, don’t let it.

Once you’ve figured out how to comply with all the relevant laws, competitions can be an easy-peasy way to engage with your customers, fans and newcomers.

 

This article is intended as a general guide only and does not constitute legal advice. For advice that is particular to your situation, please seek legal advice.