What you need to know about running a competition

Tracey Porter

Unless you’ve been living under a rock, chances are your Facebook and other social media news feeds have been alive with small business promotions asking you to share their page in exchange for a chance to win something.

Done correctly, such promotions provide a great opportunity to introduce your brand to a wider audience and reward a loyal consumer base, but done the wrong way, they could cost you thousands in fines and cause irreparable damage to the business you have worked so hard to build.

The following is a basic guide to your obligations when running a trade promotion.

Decide on the type of contest you wish to run

Currently, there are two types of contests available to small businesses when running a national or localised consumer promotion. While the laws governing such lotteries vary from state to state, their definition remains consistent. The first is called “a test of skill”, e.g. “In 25 words or less, tell us why you should win”. The second is termed “a game of chance”, e.g. instant win or prize pool sweepstakes.

You cannot run a test of skill promotion where entrants can potentially submit the same answer.

Your legal requirements

You do not require a Trade Promotion Lottery Permit if you are conducting a test of skill promotion, and there is no element of chance involved in winning. However, you must ensure that all entries are judged on their merit and disclose special terms and conditions that must be met before the prize is made available to the consumer. You cannot run a test of skill promotion where entrants can potentially submit the same answer e.g. Who won the 2012 Rugby World Cup?

If you running a Game of Chance competition in the Australian Capital Territory, New South Wales or Northern Territory, you will need to obtain a permit and for this you must have an ABN. The same rules apply if you live in South Australia and the prize pool is more than $5000.

Such permits are available via state lottery and permit boards such as the Office of Liquor, Gaming and Racing. Application fees for permits range in cost from $125 to $2100 depending on the value of the prize or money you intend to give away.

In addition there is also a list of prohibited prizes. These include tobacco, firearms or ammunition, cosmetic surgery or other procedures designed to improve personal appearance, as well as restrictions on the amount of liquor that can be contained in prize packs.

Facebook does not allow promotions on personal timelines.

Do the rules change for competitions on social media?

Social media sites such as Facebook and Instagram have their own rules governing how competitions are run on their sites, but you must still comply with the conditions set out in the under the Australian Lotteries and Art Unions Act 1901 Act.

Facebook allows users to administer promotions on page timelines or in apps on their business page. Entries can be collected by having users post on the page, commenting on or liking a post, or messaging the page, and “likes” can be used as a voting mechanism.

Facebook does not allow promotions on personal timelines. Tagging or encouraging people to tag themselves in content that they are not actually depicted in in order to win a prize is also prohibited.

Instagram also has a set of guidelines regarding photo competitions. These include: supplying participants with the official rules, stating eligibility requirements, not deceptively tagging content and verifying the competition is not sponsored, endorsed by, or associated with Instagram.

Tracey Porter

Tracey Porter is a career journalist whose mug shot appears everywhere from daily newspapers and online news sites to business and consumer magazine titles.