Category Archives: Overview of competition requirements

Notifying winners

Notifying winners can be a lot of fun, but also needs to be done carefully! Winners will be overwhelmed to hear that they have won something from your company. Many then go on to be ambassadors of your brand.

It is important to take care when notifying winners, as mistakes can be costly. In one case, a Junior Marketing Assistant conducted a competition draw before the scheduled draw time, then contacted the winner, and then went out for lunch. The Marketing Manager, unable to reach the Assistant, assumed the draw had not occurred, so conducted a second draw and notified a second winner. The prize was valued at over $25k..

Prior to contacting winners you should ensure that the winner’s original entry was valid i.e. that they completed the entry requirements, met any minimum age requirements and provided required information.

There may be some information that you need to award the prize, such as a prize delivery address, or preferred dates of travel. You can request this information in your email or letter to the winner. It is always best to have information you need in writing.

Winners must be notified in accordance with the competition terms and conditions. For a chance-based competition, you will need to notify winners in writing within 2 days of the competition draw. You may also need to publish their details on a website or in a newspaper.

Below is a sample letter that can be used to notify winners of a chance-based competition. Ensure that you change the wording to suit the circumstances of your individual competition.

Sample winner notification letter

Sample winner notification letter

When publishing a winner’s name on a website or in a newspaper the common format used is:  [Competition Name], [Prize Details] winner: First Initial] [Last Name], [Suburb].

It is a condition of competition permits that prizes be awarded in the manner specified in the competition terms and conditions.

Click here for a copy of the above document.

For more template notification letters, details on how to publish winners, and how to obtain competition permits, contact us- info@permitzgroup.com

 

Some commonly Asked questions

1. When do I need competition permits?

Competition permits are generally required if the winners of your competition are determined by chance. Typically this means the winners are either drawn or win instantly by, for example, scratching a game card.

Competition permits are not required if your winners are determined solely by skill and by qualified judges. Examples of skill-based competitions include those which typically ask a question to be answered in 25 words or less.

2. What if the draw/ my office is in a particular state, does this mean I only need permits from that state?

The location of the draw and/ or your office is irrelevant. However, if the competition is only open to residents of a particular state or it is a requirement that entrants come to a location in a particular state, you may only need competition permits from that state.

3. Do I need competition terms and conditions for a simple or a small competition?

Yes. Competition terms need to set out a number of important things. These include who can enter, when someone needs to enter, what restrictions are in place and what the prizes are. If you fail to have competition terms and conditions you will leave a number of questions unanswered. This increases the risk of a complaint or dispute later on. It is better to have clear terms and conditions which set out everything about the competition and avoid ambiguity.

4. What detail do I need about the competition prizes?

You should include as much detail as you can about the competition prizes in the competition terms and conditions.

Some state regulators specify particular information which must be included. For example, in VIC, you need to ensure you include the name or type (i.e. star rating and location) of any hotel included in an accommodation prize.

5. How long does it take to obtain competition permits?

Each state takes a different amount of time to issue a competition permit. We suggest you aim for three weeks from the day you apply to the day you need permits back. You will need to include the permit numbers in any advertising of the competition.

Common issues in terms and conditions leading to a knock back

When terms and conditions are submitted for a competition the lottery departments issuing competition permits will review the terms to ensure that they are consistent with the relevant guidelines.

Here is a list of the most common errors in terms and conditions leading to a knock back (request that the Promoter change the terms before permits are issued):

1. Not including compulsory costs in the prize. The general rule is that a winner cannot be required to incur a cost to take a prize. For example, you would not be able to offer a winner a travel prize but at the same time exclude taxes from the prize. Similarly you could not offer a boat or car, that requires registration/ transfer costs, and ask the winner to pay for those.

2. Running the promotion for over 12 months. A competition can run for a maximum period of 12 months.

3. Not completely setting out how someone enters and what the prizes are. The terms and conditions need to go into detail on how someone enters i.e. saying someone enters online without saying where would not result in competition permits being issued. A full description of the prize must also be included. i.e. if you are giving away a trip which includes accommodation you would need to set out the hotel type, room type, number of nights, location of the hotel and value.

If you have any questions on the process of obtaining competition permits, give us a call.

Limits on number of entries

When planning a chance-based competition it is important to consider how many times you want to allow one individual to enter.

If you do not require a purchase to enter and fail to place a limit of the number of entries per person, you may end up with one individual entering hundreds or thousands of times! This could be seen to be unfair to other entrants. If your competition terms and conditions fail to note any limitation there is nothing to stop one person from entering your competition multiple times. The terms and conditions that you submit to obtain a competition permit must consider and be clear about these requirements.

Multiple entries can be a pain! Consider any restrictions when planning your next promotion.

Multiple entries can be a pain! Consider any restrictions when planning your next promotion.

Other strategies you may wish to consider are requirement to verify entry via email, systems in place to stop multiple entries from the one email or one IP address. Contact us for other ways to limit this risk.

Risk management 101- consumer promotions

Other than ensuring that you obtain competition permits to authorise a chance-based competition, you then need to ensure you consider key risks. A failure to manage and mitigate risk in any promotion or consumer interaction can be disastrous.

The terms and conditions you develop for your competition must be adhered to at all times. Terms and conditions mitigate many of the risks associated with competitions by clearly setting out how someone can enter, the prizes on offer and how winners will be contacted. If you follow the terms and conditions to the letter you will avoid many of the common pitfalls. You should ensure that any onerous conditions are clear in your terms and conditions, including any limitations on taking the prize. The prize itself should be described carefully to avoid any future disagreement.

A failure to award the prize on offer may be a breach of the terms and conditions, the competition permit conditions and the Australian Consumer Law. It is very important to be transparent and act in accordance with your obligations.

Once you conduct the draw you should be careful to check that the winner complied with the terms and conditions (ensuring before the draw that only valid entries were included).

When communicating with the winner be careful to confirm their identity and to note limitations with the prize and any information that the winner must give you.

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Permitz work with chance-based competitions every day so are well placed to assist you in identifying and managing any risks.

Competition permit costs set to rise 1 July 2014

Each year competition permit costs increase as each trade promotion lottery department/ authority increases the fees payable to obtain a competition permit. The cost of a competition permit will depend on the total prize pool being given away.

If you are planning to run competition which requires a competition or trade promotion permit in the first or second quarters of 2014/2015, now is the time to apply for competition permits. By submitting applications before the end of the financial year, organisations can avoid the increased competition permit application fees.

Competition permits

Competition permits are generally required for chance-based competitions. Permits would be required from NSW and the ACT if your prize pool is at or under $5,000 and from SA and VIC if your prize pool is over $5,000 or is an instant win competition.

There are a range of permit conditions which must be adhered to as set out in the permits themselves. These include the requirements to hold all entries and records of winners for a three years. This also, obviously, includes the requirement to conduct the competition in accordance with the terms and conditions and to ensure all entries have an equal chance of winning.

Any changes to the terms and conditions or structure of the competition once permits have been approved must be approved by way of a formal amendment approval from the lottery departments.

Permitz Group are able to assist with both skill and chance based competitions. We can draft terms and conditions, apply for permits on your behalf and send you the final terms with minimums for use in advertising. We can also then conduct a draw if you would like us to do so and arrange for the notification of the winners/ publication in a newspaper.

Votes, shares, and referrals- do I need a competition permit?

We are often asked if competition permits are required for a competition where the winners determined on the basis of the number of votes, shares or referrals.

Such competitions can be an effective way of spreading a message or growing a customer database in a viral manner. Commonly such a competition would require the original entrant to submit an entry which others then vote on or require the entrant to refer friends and colleagues. The winner would be the individual with the most number of likes, shares or votes.

When conducting a referral based competition it is important to ensure you are compliant with the Privacy Act and Spam Act. It is not okay to send third-parties marketing material when they have not consented to the receipt of such material.

When conducting a vote based competition it is important to ensure you consider means to limit the risk of individuals buying votes or submitting multiple votes in breach of the terms and conditions. Permtiz can assist you in understanding your options to limit this risk.

Such a competition may involve an element of chance which would result in a need for competition permits. An element of chance may be introduced if a draw is involved or if a limited number (determined at random) can participate.

Chance can be avoided if the winners are determined on the most number of likes, shares or votes and there is a tie-break mechanism that requires and is judged on the basis of skill. For example, if two or more entrants receive the same number of votes, to determine the ultimate winner the Promoter could ask the tied winners to submit an answer to a question and then judge the winner on the basis of their answer.

When do I need a competition permit?

We are often asked when a competition permit is actually required?

General considerations

Competition permits are typically required for chance-based competitions. Usually this is easy to determine. For example a competition which involves a draw when determining the winners will require a competition permit. A competition permit is not required for a game of skill where the winners are determined by a qualified judge. For example a competition that asks entrants to provide an answer in 25 words or less would not require a competition permit if the winners of that competition were judged on the basis of their answer.

Other types of competition are not so easy to classify. Some competitions involve both skill and chance in determining the winners. An example of a mixed game of skill and chance might be where entrants need to submit answers in 25-words-or-less which are judged by a qualified judge but then given a chance to win a major prize by just participating in the promotion. To determine the major prize winner a draw might take place. In such a situation the whole competition would need to be reviewed by the state gaming authorities. In such a situation it may be possible to split the promotion if the Promoter were looking to reduce the cost of permits.

Specific consideration

Another aspect to consider is whether the competition will be open and advertised nationally. Of the different states in Australia: New South Wales, Victoria, the Australian Capital Territory and South Australia are the only states that require you to apply for a competition permit. A competition permit will be granted in WA under the regulations by default provided that your competition complies with the permit conditions and that you submit a copy of your terms to the Department of Racing, Gaming and Liquor. You will need a competition permit from the Northern Territory if you don’t have a competition permit in another state or territory.

There are some exemptions that you may be able to take advantage of. For example in the Australian Capital Territory you will not need a competition permit if your promotion is centered on the grant of a refund of a purchase price (and provided you comply with the other aspects of the exemption).

You will also need to review whether you are exempt from the need for a competition permit based on the total you are giving away. You won’t need a competition permit from South Australia and Victoria if your total prize pool is under $5,000 (and your competition mechanic- for SA- is not instant win).

How do I obtain a competition permit

Once you have determined if you need a competition permit the next step is to apply. Each state has a different competition permit application process. It is important to ensure that your competition complies with the various requirements in each state. If your competition does not comply you are not likely to obtain a competition permit. Permitz can apply for competition permits on your behalf.

Once you have the competition permits you require you will need to ensure you include them in all advertising, along with the other mandatory information.

Please let us know if you have any questions on the above or would like us to review whether or not your competition needs a competition permit.

Privacy Law and competitions

Australia’s amended privacy laws came into effect just under a month ago, and if you haven’t already done so, now is the time to review your Privacy Policy and practices.

Competitions are often centred on the collection of personal information. If you are conducting competitions, with the aim of (or resulting in) collecting personal information, ensure that your competition is compliant with the Privacy Act 1988 [the Act].

The Act and Australian Privacy Principles [APPs] govern the collection, storage, use and disclosure of personal information.

What is personal information and who is covered?

Personal information is defined in section 6 of the Act as “information or an opinion about an identified individual, or an individual who is reasonably identifiable:

(a) whether the information or opinion is true or not; and

(b) whether the information or opinion is recorded in a material form or not.”

The Act applies to businesses with a turnover of more than $3 million a year who collect personal information or to those businesses who fall within a listed category.

A ‘B2B’ business may still be bound by the Act if it handles personal information, such as the personal information of contacts within its clients’ businesses or of employees of its clients.

Importance of Compliance

There are significant potential penalties that can be imposed for non-compliance, and for repeat breaches of privacy laws, including enforceable undertakings and fines of up to $1.7 million- Not to mention the reputation damage resulting from a breach.

Collection of Personal Information via Competitions

To understand the application of the Act and APPs in relation to competitions, it is necessary to review: a) the reason for collection, b) the types of personal information collected, and c) how information is collected. There are typically two reasons for collection of personal information. The first is to conduct the competition i.e. to conduct the draw and to notify winners. The second is to use personal information for marketing including via email.

If you conduct direct marketing using personal information collected via a competition, you will need to consider APP 6 and APP 7: “If an organisation holds personal information about an individual, the organisation must not use or disclose the information for the purpose of direct marketing.” Review the exemptions to this principle contained in APP 7.2 and APP 7.3. Ensure that, if you use personal information for direct marketing, you are compliant with APP 7.

We sought independent legal advice from a professional in the field who confirmed the following:

“When entering into the draw, the individuals need to consent to the use and disclosure of their personal information. This can be achieved by using a privacy policy incorporated into the general terms and conditions of the lucky draw. The privacy statement will provide the methods and ways the personal information of the individuals are collected, used and disclosed. Acceptance of the general terms and conditions and hence the privacy policy will amount to consent.”

Consequently, it is important that your competition terms make the intended collection, use and disclosure of personal information clear to entrants.

One question that often arises is whether a competition entry page should include an ‘opt-in’ or if entry in itself can constitute consent. The legal advice we received indicates that entry can be consent, for the purposes of the Act, so long as the terms and privacy policy are clear. If entry itself is conditional on consent we would suggest this be made clear at the time of entry i.e. in the condensed terms.

If consent to receive marketing material is not mandatory then an opt- in (not pre – ticked) should be used.If marketing material is to be sent electronically then it is also important to consider the Spam Act.If an entrant has given positive consent to receive marketing material including via electronic means for an unlimited period, an option to opt- out must be included in all future messages sent. Typically, this would be as simple as a reply email or the click of a button. All messages must also include contact details and the identity of the sender.

Your Privacy Policy 

It is no longer acceptable to have an ‘off the shelf’ Privacy Policy which does not specifically address how your business collects, stores, uses and discloses personal information. Your Privacy Policy should be specifically drafted to reflect the reality of how you do business. APP 1.4 lists some of areas that should be covered by a Privacy Policy.

Next steps

A sensible idea is to conduct a comprehensive audit into how and why you collect personal information and how it is then stored, used and disclosed. Update your Privacy Policy to reflect the results of the review.

When reviewing the kinds of personal information collected, you should consider if you actually need to collect that kind of personal information. Review APP 3 which requires that you only collect personal information “reasonably necessary for one or more of the entity’s functions or activities.”Consider whether or not you collect ‘sensitive information’ and if so review all requirements in the Act and APPs relating to sensitive information. Consider how long you need to hold information and if you can de-identify or destroy information you no longer need.

Permitz is able to conduct a compliance audit of your business and provide you with a report and list of recommendations. Permitz can then update your Privacy Policy based on the review.

Note: This is not intended as a comprehensive guide to the Act or APPs. We recommend that you seek independent legal advice to ensure compliance with the Act and all other applicable laws.