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How your SMEs can safely execute competitions

Do you want to achieve rapid exposure and growth for your business at a relatively low cost? If so, look no further than competitions! A well-executed competition is a great way to create buzz and position your business to achieve success. But wait! Before you undertake this strategy, you must be aware of the law and any rules and regulations governing the use of your proposed competition.

Along with the general rules, I will focus on the use of competitions on social media, by looking at the operation of the Spam Act 2003, anfd the unique competition policies of each social media platform.

State Government Competition Rules for Trade Promotion

Before you even begin creating your competition, it is important to familiarise yourself with the competition rules for each jurisdiction in which you plan to run your competition. Remember – this may extend beyond the jurisdiction in which your business is registered or operates!

For example, to run competitions where chance, rather than skill, determines the award of prizes – such as “like to win” competitions – some Australian jurisdictions require you to apply for a permit. Check out the Australian Business Licence Information Service (ABLIS) website to find out whether this includes your State, and download a permit if required.

How can I legally collect information? – The Privacy Act 1988

The way you can collect, use and store personal information about competition entrants is strictly regulated. First, all jurisdictions require you to publish a comprehensive set of terms and conditions which disclose who is collecting the information, how it will be collected, what it will be used for, how it will be stored, and who it will be disclosed to. This information must be readily available to entrants from the competition notice or entry form.

Using Competitions on Social Media

The use of social media for business promotion has grown rapidly over the past decade. Today, a business without a social media presence is almost unheard of. Competitions on social media entail their own unique legal considerations.

The Spam Act 2003

The Spam Act operates across all Australian jurisdictions and prohibits the sending of unsolicited commercial electronic messages – known as “spam”. Spam is defined broadly by the Act to include any message that offers, advertises or promotes the supply or supplier of commercial products and interests, as well as any message that promotes commercial gain via dishonesty or deception.

By using competitions, you will likely obtain the contact details of numerous potential clients. Due to the Spam Act, though, you must be very careful with the promotional messages you send, as anything captured within the definition of spam is illegal.

Hint! A useful way to get around this rule is by obtaining consent from your intended recipients. For example, you can obtain express consent by incorporating a tick box in the competition entry form which permits you to send electronic messages. Implied consent is more complicated but can sometimes be inferred from the entrants’ conduct. It’s best to always get express consent!

Social Media Platform Rules

Finally, social media platforms have their own rules for how competitions can be run. Facebook is currently the most popular platform. It has a stringent competition policy which, if not followed, will result in the competition being removed. For example, the use of Personal Timelines and friend connections to administer promotions – such as, “share on your Timeline to enter” – is prohibited. The other major social media platforms such as Twitter, Instagram and YouTube, also have their own policies.

The bottom line

There is no doubt why competitions are so popular among businesses, but along with the potential rewards comes risks and responsibility. You need to do your research about the rules applicable to your business, and decide which type of competition would best help you achieve your specific goals. Alternatively, speak to experts in digital and social media law.

About the author

Katherine-HawesWith over 20 years’ legal and business experience, Katherine Hawes is the founder and principle solicitor of Aquarius Lawyers.  She has written a number of articles for Dynamic Business, including How to protect your IP when you have an online business


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Katherine Hawes

Katherine Hawes

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