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How competitions could land your business in hot water

Competitions are a sure-fire winner when it comes to attracting customers, building brand awareness, and increasing traffic – especially during the holiday season.

But while competitions might seem like an easy marketing win, according to O*NO Legal founder and legal strategist Kristen Porter, the process isn’t as simple as it seems.

And if you aren’t familiar with the legal requirements of running trade promotions in your state, the penalties can be huge. 

“No matter where you run your competition, not meeting the legal requirements can land you and your business in legal hot water,” Ms Porter said.

“It may seem as easy as posting an advertisement and handing out a prize – but there is a whole world of legal rules and guidelines that must be followed.”

If you are a business that sells a product or provides a service, then in most cases, you’ll be eligible to run a trade promotion competition promoting those products or services.

But there are a few things you’ll need to keep in mind.

“For example, the rules of the competition must clearly be provided to potential participants,” Ms Porter said.

“This is so participants can make informed decisions about their participation.”

Terms and conditions

“Trade competitions can’t involve conduct that’s likely to mislead or deceive, meaning you must nail your terms and conditions (T&Cs),” Ms Porter said. 

The requirements for your T&Cs will differ depending on where you run your competition, but regardless of the various state/territory laws, should generally cover things like:

  • Information about the prize or prizes
  • How the competition will proceed
  • How prizes can be won or winners will be determined and how often
  • If it’s a trade promotion, the competition must be free to enter. If you must purchase a raffle ticket, then the rules and requirements will differ.

“The message here is walk the walk and talk the talk – deliver what you promised,” Ms Porter said.

“The T&Cs should be included on any advertisement for the competition. If that’s not possible, details about where the rules can be found, such as a website, must clearly be indicated in most cases.”

Each state and territory also carries rules about how, where, and in some instances when, the name of the winners must be published.

Another thing to consider is whether your trade competition is a game of skill or a game of chance, and any licence or permit requirements for your state.

Social media

Running a competition through social media is one of the cheapest and most effective ways of promoting your trade competition.

“It’s important to always link your T&Cs,” Ms Porter said.

“And don’t imply that the social media company endorses or is associated with your competition. Each platform has its own rules, so you’ll need to be familiar with those too.”

You’ll also need to ensure there’s a privacy policy in place, and all entrants are linked to it upon entry.

As with all things legal, competition requirements can be a minefield, which is why O*NO Legal has developed a free competition checklist, which you can download here.

You can also purchase a terms and conditions template from the online store, here.

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