Promotional marketing: Prize draws


INSIGHT
Published
Sep 24th '21
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Before proceeding with a prize draw marketers should seek legal advice to ensure that they are not running an illegal lottery. See Promotional marketing: Lotteries and Promotional marketing: Free-entry routes.

 

Promoters running prize draws in social media may find this advice on Promotional marketing: Prize draws in social media useful.

 

  • Types of prize draw

The term “prize draw” includes a variety of promotional mechanics:

 

In traditional prize draws, the winner is chosen at random from all valid entries returned by participants.

 

In “pre-selected winner” promotions, entry codes or numbers will be distributed to consumers in product packs or by other means, each bearing a unique code or other form of identification. The winning entry will have already been pre-selected before distribution, and the winner will be the customer who enters with this pre-selected winning entry. Prizes are only awarded to those who return the winning code or symbol to the promoter within the promotional period. Therefore, prizes may not necessarily be awarded as the winning entry may not be submitted. If the winning entry is not submitted, a promoter may choose to allocate the prizes using a traditional prize draw to those who have entered.

 

An “Instant win” promotion is one in which winning tickets are randomly and securely distributed in or on promoted products and consumers get their winnings at once or know immediately what they have won and how to claim it without delay or administrative barriers. See Promotional marketing: Instant wins.

 

The Advertising Standards Authority (ASA) has considered prize draws which appear in multiple different types of media, including direct mail, leaflets, advertisers own websites, packaging, and social media.

 

  • Administering the promotion

Promoters are responsible for the administration of their prize draws, and must ensure that promotions are conducted under proper supervision, and that they have adequate resources in place to administer the promotion as described (8.15). Promoters must also plan to allow adequate time for each stage of the promotion, including collecting entries, selecting winners, and announcing results.

 

Where entry into a prize draw is based on participants carrying out multiple actions promoters must make sure they can accurately track all entrants and include all participants who meet the entry criteria when selecting the winner. The ASA has considered complaints about multiple prize draws advertised online, which required participants to carry out multiple actions such as liking an Instagram post, tagging a friend, and subscribing to an influencer’s social media channels. Because promoters were unable to demonstrate how they had planned to administer these promotions or accurately collate all entries, including bonus entries, they were upheld by the ASA (see Molly-Mae Hague, 3 March 2021Bellatricks Ltd, 01 September 2021, and PrettyLittleThing.com Ltd, 01 September 2021).

 

Promoters are responsible for all aspects and all stages of their promotions, and must not cause unnecessary disappointment or give consumers justifiable grounds for complaint. The ASA received 57 Complaints about a prize draw from complainants who had been sent an email informing them that they had won the promotional prize, but were later told that the email had been sent to them in error. Whilst the ASA acknowledged the promoter’s explanation that the problem was caused by a technical issue, because the promoter had claimed consumers had won a prize when they had not, they considered that the promoter had given consumers justifiable grounds for complaint, and that the promotion had not been administered in accordance with the Committee of Advertising Practice (CAP) Code (TheHut.com Ltd t/a Zavvi, 02 October 2019).

 

  • Terms and Conditions

Advertising rules state that all marketing communications, or other material referring to promotions, must communicate all applicable significant conditions or information where the omission of such conditions or information is likely to mislead. The Advertising Standards Authority (ASA) has generally interpreted this as meaning that significant information and conditions should be stated in the initial marketing material (Ashworth and Parker Ltd t/a END, 30 August 2017).

 

Any information which consumers need to make an informed decision about whether to participate in a promotion or not will be considered significant. Advertising rules list significant conditions which are likely to apply to all promotions, including how to participate, a closing date, the nature and number of prizes or gifts, and any eligibility or availability restrictions. However, promoters should be aware that there may be additional conditions which will be considered significant, depending on the promotion, and any information which could affect whether a consumer decides to take part in a promotion or not will be considered significant. The ASA considered complaints about a promotion which was advertised on multiple platforms, in which the winner was chosen by the promoter randomly selecting a platform, then selecting an entrant from that platform. Because the information that the promotion was open to entrants across multiple platforms was likely to significantly influence consumers’ understanding of the promotion, and was important so that they could make an informed choice about how, and how many times, to enter, this was considered significant, and should have been made clear in the ad (Hughes TV and Audio Ltd, 1 September 2021).

 

When offering a free trial, ads must make clear if customers are automatically enrolled into a subscription service, and must include all other significant information. Complaints about an ad for free access to an online course were upheld by the ASA, because there was no information in the ads which made clear that the free four-week access was a limited trial period, or that, by signing up to the four-week free access period, customers were entering into a subscription (Shaw Academy Pvt Ltd, 07 July 2021).

 

All other terms and conditions should be available before or at the time of entry, but do not need to be given as much prominence; they might, for example, be stated on an in-store leaflet, accompanying literature or, if entry is by a website, a webpage on the promotor’s website linked to from the ad. They include (but are not limited to): how and when winners and results will be announced; when prize winners will receive their prizes (if more than 30 days after the closing date); whether there is a cash alternative and any restriction on the number of entries.

 

All promotional terms and conditions must be easily accessed throughout the promotion, in a form retainable by entrants. A complaint about a Facebook ad for a promotion was upheld because, although the ad included a link to the full terms and conditions, this link did not work and participants were unable to access them (Thomas Cook Retail Ltd, 18 October 2017). Similarly, the ASA upheld complaints about a promotion run on Instagram because the ads did not reference or provide links to the terms and conditions at the time they were seen by the complainants, which meant that they were unable to retain or easily access the terms and conditions prior to entering the prize draws (21 Three Clothing Company Ltd t/a PrettyLittleThing, 16 May 2018).

 

The ASA has ruled that it is not acceptable to include significant information on the envelope only, as consumers are unlikely to retain the envelope. Similarly promoters should not state terms and conditions on the back of return entry slips (Kingstown Associates Ltd t/a Healthy Living Direct, 10 August 2011; HHS Trading (UK) Ltd, 20 June 2007). See Promotional marketing: Terms and conditions.

 

Changing T&Cs during the promotion should be avoided at all costs and promoters would have to have a robust defence to show that they dealt fairly with consumers and did not cause unnecessary disappointment. The ASA has upheld complaints where a promoter created and enforced T&Cs retrospectively, even where the aim was to combat abuse (Headwater Holidays Ltd, 08 January 2014). See Promotional marketing: Abuse.

 

  • Selecting winners

Promoters of prize draws should ensure that prizes are awarded in accordance with the laws of chance. If a verifiably random computer process is used, the ASA would expect to see evidence of this. If such a computer programme has not been used winners must be selected by, or under the supervision of an independent observer.

 

The ASA upheld complaints about a prize draw because, although the promoter explained that they had randomly selected a shortlist of 100 participants from a hat, and that they selected the final winner randomly from this shortlist, they provided the ASA with no evidence to demonstrate that this was the case (Molly-Mae Hague, 3 March 2021).

 

Picking names out of a hat is likely to be fine as long as someone unconnected with the promotion is there to ensure that it’s done fairly, and the promoter has evidence to demonstrate that this is the case.  Complaints about a promotion in which the prize winner was selected by a member of staff scrolling through the post’s comments and selecting one manually were upheld by the ASA, because a member of staff was not considered an independent person (Bellatricks Ltd, 01 September 2021. See also Asha’s Restaurants International Limited, 20 December 2017).

 

Prizes must be awarded as described, or a reasonable equivalent. A complaint about a promotion on YouTube, which asked viewers to like and subscribe to the promoter’s channel for the chance to win £10,000, was upheld by the ASA because the promoter did not provide them with any evidence to show that the prize had been awarded (Stephen Bear, 16 June 2021).

 

If the prize originally offered cannot be awarded then promoters must still award a reasonable equivalent. If a concert is cancelled, for example, it’s reasonable to arrange tickets for a different date or discuss with the winner an appropriate alternative.  In order for an alternative prize to be considered a reasonable equivalent it must be of roughly equal value to the prize advertised; offering an alternative prize of significantly lower value to the prize advertised is unlikely to be considered a reasonable equivalent. Complaints about a promotion which offered 70% of the value of ticket sales instead of the advertised prize, if all the tickets were not sold, were upheld because this was not considered a reasonable equivalent. The ASA considered that a promotion which relied on generating a sufficient number of ticket sales, such that 70% of those sales would be equivalent value to the price of the prize, was likely to breach the Code if they failed to sell the requisite number of tickets (KS Competitions Ltd, 02 December 2020).

 

The terms and conditions should state how prize winners will be informed, and prize-winners should usually receive their prize within 30 days. Both CAP and the ASA would expect promoters to make all reasonable efforts to contact the winner. Ringing a winner once will not be considered sufficient (Walkers Snacks Ltd 28 August 2013). If, despite their best endeavours, they are not able to contact the winner, promoters do not need to award the prize. Some promoters award the first prize to the runner up.

 

The Code also states that promoters must either publish or make available information that indicates that a valid award took place – ordinarily the surname and county of major prizewinners and, if applicable, their winning entries. They must also inform entrants at or before the time of entry of their intention to publish or make available the information and give them the opportunity to object to this or to reduce the amount of information published or made available. In such circumstances, the promoter must nevertheless still provide the information and winning entry to the ASA if challenged. The ASA upheld complaints about a promotion by Bier Nuts which offered multiple prizes, including £120,000 worth of beers, snacks & merch, because they did not provide evidence which demonstrated that they had published or made available information that valid awards took place (Bier Nuts Ltd, 21 July 2021).

 

For more information please see ‘Promotional marketing: Prize winners‘.

 

  • Exaggerating luck, Gifts v prizes

Promoters should neither imply consumers have won if they have not nor otherwise imply consumers are luckier than they are. One of the most common ways promoters do that is by confusing “prizes” with “gifts”. The difference between a gift (available to all or many) and a prize (awarded to a few) must always be clear to consumers. If all or a significant proportion of participants in a promotion are entitled to it, an award should not be described as a prize; and should be described as a “gift”, “award”, “reward” or similar as long as the context is not misleading.

 

Advertising rules state that ads for prize promotions must not mislead by exaggerating consumer’s chances of winning prizes. For example, if an ad states that thousands of prizes are available to be won, but only a small amount will actually get awarded, this may mislead consumers by creating an exaggerated impression of their chances of winning. The ASA investigated a promotion which advertised “£3 million of prizes available”, but in which only 0.56% of the prizes available were actually awarded. The ASA acknowledged that that the mechanic itself was not necessarily problematic, however, because the likelihood of winning a prize (and therefore the number of prizes that had actually been won) was so extremely low, the overall impression created by the package significantly exaggerated the likelihood that consumers would win the prizes. They ruled that the ads should have given a realistic indication of the chances of winning to ensure that consumers could make an informed decision on whether participation was worthwhile (McCain Foods Ltd, 11 July 2018).

 

Promoters should not claim that consumers are luckier than they are by, for example, using words like “finalist” or similar, or falsely claim or imply that consumers have won, will win or will, on doing something, win a prize if that prize does not exist.

Advertising rules prohibit promotions where consumers incur a cost to claim a prize. Charging a consumer to ring and claim their prize is unacceptable (Churchcastle Ltd t/a Spencer & Mayfair 2011, 20 February 2013).

 

Source: CAP

 

Note: This advice is given by the CAP Executive about non-broadcast advertising. It does not constitute legal advice. It does not bind CAP, CAP advisory panels or the ASA. CAP’s AdviceOnline entries provide guidance on interpreting the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing.

 

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