Trade promotions and competitions have become a common tool for businesses to connect with their customers, create brand awareness and loyalty, and support sales and social media engagement.
Whether it’s prize giveaway, a product promotion or a creative contest, competitions are frequently used to generate buzz around personalities, products or services.
When running a contest, businesses often forget to ensure there have clear terms and conditions.
This article, written by Allison Inskip, a Senior Paralegal at Prosper Law, explores why terms and conditions are crucial for your trade promotions and competitions.
Key Takeaways
- Terms and conditions should clearly outline the rules and expectations of the competition
- The competition terms and conditions can sit on your businesses website terms and conditions page
- This can protect the company from potential legal issues and ensures a positive experience for participants
- By setting clear guidelines, businesses can prevent misunderstandings and disputes, ultimately safeguarding their brand reputation
- Clear terms and conditions can build trust with customers and show a commitment to fairness and transparency
- Investing time and effort into creating comprehensive terms and conditions can enable businesses to run successful competitions
Legal Compliance
First and foremost, adhering to the relevant laws and regulations should be a priority. Whether the competition is a game of chance, game of skill or something else entirely, terms and conditions allow companies to outline the rules and their obligations for compliance with consumer protection laws, privacy regulations, and trade promotion laws.
The rules that will apply to your competition can vary depending on the Australian State where the competition will take place. For example, in the ACT, games of chance are governed by the Lotteries Act 1964, and permits may be required.
These laws set specific rules and obligations for business running trade promotions. Your competition will also need to be in line with consumer protection, privacy, and other trade laws.
Transparency of Rules
Clear and transparent competition rules will play a vital role in fostering trust and credibility among your customers and competition entrants. Transparent rules can make competitions fairer and reduce confusion or accusations of unfairness from participants.
When the terms and conditions of the competition are clearly explained, participants gain a better understanding of how the competition operates and what is required for their entry.
Clear rules should outline the criteria for selecting winners, how data will be collected and used during the competition, and the methods for distributing prizes.
Enforcement of Rules
When terms and conditions are tailored to the competition, they can serve as a basis for ‘worst-case scenarios’. They can provide businesses with the framework to take action against entrants who engage in fraudulent activities, violate terms of use, or fail to meet the entry deadline.
By doing so, businesses can deter misconduct and maintain the integrity of the competition. This safeguards the competition but also protects the reputation and credibility of the brand hosting the event.
Protection of Intellectual Property
When organising competitions that involve the submission of original content like photos, videos, or designs, businesses should use their terms and conditions to establish ownership rights over the submitted content.
This enables businesses to own content and decide how to use it, such as for marketing or promotions in the future.
Businesses can also prevent unauthorised use of their own intellectual property by setting clear rules on copyright, plagiarism, and trademark usage.
Dispute Resolution
Even with solid terms and conditions, disputes can still arise. In our experience, they generally occur around eligibility to win a prize, the selection of winners, or the allocation and delivery of prizes.
In these cases, the terms and conditions serve as a reference point for resolving conflicts. They can also provide a pre-set avenue for dispute resolution, such as arbitration or mediation.
This helps mitigate the likelihood of protracted legal battles and can help preserve brand reputation. This can also help deal with conflicts quickly and prevents legal issues.
Brand Protection
Without clear rules, companies risk damaging their reputation and facing negative attention, controversies, or unhappy participants.
Well-drafted terms and conditions allow businesses to maintain control over their brand image, mitigate reputational risks, and uphold brand values throughout the competition period.
Download our comprehensive guide on all things Trade Promotions in Australia, linked on this webpage.
Frequently Asked Questions
What are terms and conditions?
Terms and conditions (often referred to as Ts&Cs) outline the main parts of a competition.
They generally sit on their own webpage, and entrants can be directed to them by a hyperlink on the competition entry page or noted on the entry product.
The terms should include all known elements of the competition, including entry requirements, prize details, any restrictions, and when and how the winners will be announced.
What are some examples of competitions?
Competitions can take various forms such as social media prize giveaways, product promotions, or creative contests.
The types of competitions we see are generally games of chance (e.g. random draw), games of skill (e.g. 25 words or less) or gifts with purchase (e.g. buy X and get Y).
Why are competition terms and conditions important?
Clear and transparent terms and conditions are crucial for ensuring the success and legality of competitions.
Businesses who don’t comply with the competition laws may be subject to penalties or reputational damage.
How should winners in a competition be notified?
The terms and conditions need to specify how to notify winners if they win. Each state has its own requirements for winner notifications. In NSW, you must notify the winner of a draw within two days after the draw.
This notification can be done face-to-face, via mail, phone or email. Importantly, it’s not sufficient to merely attempt notification—you must make every reasonable effort to locate and inform the winner.
Additionally, the winner’s announcement should align with the promotion’s method (e.g. on the relevant forum).