What You Need to Know About Online Competitions and Prizes
Posted on: 8th June 2014
Here is a basic guide on the rules and regulations of online competitions in Australia. Read on to find out about it.
- Competitions and Consumer Rights Businesses these days engage in online competition services for different reasons: promote their products and/or services, ensure the loyalty of existing customers, widen clientele range, and strengthen their brand, to name a few. But running an online competition is a serious matter. Organizers or promoters must adhere to the rules and regulations set by specific states in Australia in order to protect the rights of the consumers and ensure fair play throughout the competition. Marketing managers of companies must ensure that they have followed the terms of conditions set by the government body of the particular state where they are running the online competition; otherwise, they will face stiff fines or suffer legal consequences. This may hurt their business in the long run. Businesses running online competitions must place the rights of the consumers above all else; meaning, they must declare the actual value of the prize. Furthermore, they must set clear rules on how to enter, qualify and win.
- Online Competition Permits In Australia, different states have different rules and regulations about online competition permits. Most of them do not require businesses to get permits if the online competition is a game of skill type of competition. Needless to say, the type and value of the total prize dictate the need for a permit. Since most online competitions are meant to promote and strengthen the status and/or brand of a business, they are classified as ‘trade promotion lotteries’. Since different states in Australia provide different sets of rules and regulations, you have to always be updated of the variations and/or changes before setting your online competition in motion. This will help you avoid any sort of legal predicament that may affect your promotions as well as your business.
- Chance versus Skill There are two general classifications for online competitions or ‘trade promotion lotteries’: games of chance and games of skill. In games of chance, there is a random element which means the name of the winner or winners will be drawn at random. The entrant does not have any control for the outcome. In games of skill, there is no random element which means the entrants must follow specific instructions that would test their skills, knowledge or expertise about a particular subject matter. A group of judges would determine the qualified entrants for the winning prize and select the best from among these qualified entrants. The entrant, therefore, can control the type or quality of his/her answer or performance in order to maximise his/her chances of winning. An example of a game of skill is answering a question using 25 words or less. There is no one definite answer to these types of competitions to avoid having to select more than one winner and having the winners split the prize value equally among themselves. No matter the total prize value, games of chance usually need to have a permit before it can be operated in most states and territories across Australia. If you want to avoid the hassle of securing a permit and/or having to pay for it, then you might want to consider restructuring the format of your online competition so it can be a game of skill type of competition instead. On the other hand, if the online competition provides a prize that is worth higher than $5,000 AUD, then a permit is really necessary before you can start running it.
- Entry Costs Other states may require you to run an online competition that is free for all entrants. There are some who would allow you to only have a specific number of phone calls from entrants. But almost all states and territories allow you to run an online competition where entrants must purchase a particular product or avail a specific service from your business in order to enter or qualify.
- Prioritising Public Interest In all online competitions you are going to run, it is best to ensure that they reflect your desire to prioritise public interest above all else. Otherwise, the state authorities from the Victorian Commission for Gambling Regulation might not grant you a permit and this could hold you back from achieving your business goals. For example, if the online competition requires entrants to engage in activities that would put them at risk, it might be denied of a permit. These may include use of firearms, tobacco and alcoholic beverages as well as engaging in gambling or other dangerous behaviour. Always consider the well-being of the entrants when you run an online competition. This way, you can get a permit and run a successful online campaign which will benefit both the consumers and your business.