Although promotional competitions are a form of lottery, since April 2011 they have been governed by the Consumer Protection Act (No 68 of 2008) and not the Lotteries Act. However, the National Lotteries Commission remains responsible for monitoring compliance of competition promoters with the provisions of the law.
In terms of the Consumer Protection Act, a promotional competition is “any competition, game, scheme, arrangement, system, plan or device for distributing prizes by lot or chance if (1) it is conducted in the ordinary course of business for the purpose of promoting a producer, distributor, supplier or association of any such persons, or the sale of any goods or services (2) any prize offered exceeds (the amount specified in regulations)”.
This definition of a promotional competition applies regardless of whether participants need to demonstrate any skill or ability in order to win a prize. The Consumer Protection Act sets out basic rules for the running of promotional competitions in Section 36. These are summarised below.
Ban on misleading communication
This ban is aimed at marketing campaigns which use fictitious competitions as a way to lure members of the public to purchase their products.
The Act prohibits informing another person that s/he has won a competition if:
i. no competition has in fact been conducted.
ii. the person has not in fact won the competition.
iii. the prize for that competition is subject to a previously undisclosed condition; or
iv. the person is required to offer further consideration for the prize, after the results of the competition have been announced.
It also prohibits informing anyone that s/he has a right to a prize:
i. to which the person does not in fact have a right.
ii. if the prize was generally available or offered to all similarly situated persons or class of persons; or
iii. if before becoming eligible to receive the prize, the person is required to offer further consideration for the prize or to purchase any particular goods or services.
Prohibition of payment to participate
There must be no payment required for people to participate in a promotional competition beyond the standard cost of the postage, SMS or other means of sending the entry. There should be no entry fee and if participation requires that individuals purchase a particular product or service in order to enter, the prize charged for that product or service must not be more than the prize excluding discounts ordinarily charged for those or similar products or services.
Restriction on prize winners
A competition promoter may not award a prize to a winner if it is unlawful to supply the relevant goods or services to that individual. For example, a prize of alcohol could not be awarded to someone under the age of 18 years.
A competition promoter may not award a prize to a range of business associates specified in the Act.
Responsibility to publish rules and other details
A competition promoter must develop rules for the competition, supply a copy of these rules to the National Consumer Commission, provide copies to members of the public on request and retain a copy after the end of the competition.
Rights of participants
An individual has a full right to participate in a promotional competition as soon as s/he complies with conditions for entry (if there are any) and acquires or accesses the medium through which participation occurs.
A winner has the right to the benefit – or prize –as soon as the results are determined and the award of the prize may not be subject to any further conditions or requirements, or payment of any kind.
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