Kay-Anne van Zyl, senior associate at law firm Kemp Little, advises retailers on running promotions and competitions.

Sales promotions and competitions are a popular way for retailers to increase customer engagement. They can also attract new customers and incentivise participation in marketing surveys.

In England, such promotions or competitions are subject to the UK Code of Non-broadcast Advertising; Sales Promotion and Direct Marketing (CAP Code); and also Advertising Standard Authority’s (ASA) monitoring.

The Cap Code is amended regularly, including recently to change the rules about announcing major prize winners. Retailers, therefore, should review it regularly.

Competition or promotion?

A ‘competition’ is an arrangement in which the allocation of prizes is on the basis of skill. Otherwise, ‘promotion’ can describe a range of activities including discount promotions and prize draws.

The CAP Code divides prize draw promotions into three categories: where the winner is chosen at random; where the winner is pre-selected, for example through the distribution of entry codes or numbers, but the winning number was pre-selected; or instant wins.

Promotions, where no skill or knowledge is necessary to win, should not be described as a competition. Nor should they give the impression that anything but chance determines the winner.

CAP Code compliant competitions and promotions

Here are our tips for CAP Code compliance at each stage:

Preparation is key:

• You must demonstrate you have considered how many entrants you might get and that you can meet the demand. Retailers should avoid encouraging a purchase as a precondition of entry if numbers of the promotional item are limited unless this availability is well notified.
• Seek legal advice and/or speak to the Gambling Commission to ensure that any payments involved do not make your competition/promotion an unlawful lottery.
• Consider additional rules are applicable if your promotion is addressing, or directly targeting, anyone under 16 years of age.

Your terms and conditions (T&Cs) should:

• Confirm how winners will be notified of results. This includes any time limits on collecting prizes;
• Be accessible by entrants throughout the promotion; and
• Only feature amendments in exceptional circumstances.

All marketing communications for your promotion/competition should set out the “significant” T&Cs (those terms that are likely to influence the decision to enter or understanding of the promotion, such as start and closing dates, how to participate, the number/type of prize and its availability and restrictions) before or at the time of entry.

Other terms, such as those about the restriction on number of entries, substituting prizes, the judging process or winners notified should also be available. However, these do not need as much prominence.

Selecting prize winners

If drawing a winner at random, be ready to verify this. For example, when using a computer process to produce verifiably random results, support it by a screenshot of the spreadsheet using the random function formula. Alternatively, selection of the winners must be by, or under the supervision of, an independent person.

If the method used to select a winner is subjective, you need to have an independent judge or panel member. This person’s name should be available on request.

Independent judges must have no association with the competition’s promoters, intermediaries (such as sponsors) or be from the pool of entrants.

Informing prize winners

You should contact the winner(s) in the method and timeframe described in your T&Cs or within a reasonable timeframe (normally around 30 days).

You will need to take suitable steps and make an adequate number of attempts to contact winners (ringing a winner once, for example, will not suffice).

Announcing prize winners

In a change to past practice, retailers must now either publish, or make available on request, proof that a valid award took place (usually the surname and country of major prize winners and/or their winning entry).

As such, you must:

• Notify entrants if you intend to publish or make available that information so that the entrants may object to such publication;
• Supply the above information to the ASA if someone challenges the promotion, regardless of the prize winner’s objection; and
• Comply with your overarching legal requirements and not prejudice the privacy of prize winners by publicising their personal data.

What if we don’t comply?

Retailers running promotions in England fall within CAP/ASA’s self-regulatory system. They will be subject to the enforcing bodies’ active monitoring, investigations and rulings.

If there are complaints or non-compliance, the main sanction the ASA uses is adverse publicity via the ASA’s public rulings, its website or general media.

Other sanctions include ad alerts to CAP members advising them to withhold services from non-compliant retailers. Also, revoking trading privileges or requiring pre-publication vetting of marketing communications.

Outside the CAP Code, breaching any applicable laws, policies and standards in respect of consumer protection, advertising and gambling may also lead to investigations, fines or other penalties.

Kay-Anne van Zyl is a senior associate in the commercial technology team at law firm Kemp Little.