Competitions and prize draws via social media: Make sure your business is trending for the right reason

In recent years the world has witnessed exponential growth of social media use; with the likes of Instagram boasting over 800 million users and Facebook in excess of an astonishing 2 billion. It is therefore unsurprising that we are seeing a vast increase in the number of businesses using social media as a platform to increase brand awareness and customer interaction.

Naturally, therefore, use of social media for competitions and prize giveaways is becoming increasingly popular. No doubt we have all come across the words "COMPETITION TIME" or "RETWEET TO WIN" on the likes of Twitter, Instagram and Facebook. Although such competitions/prize draws are a simple and relatively informal way to interact with customers and followers, it is important to remember that they must still comply with the relevant legal rules and regulations. Unsurprisingly, the internet is awash with social media giveaways and competitions which fail to do this.

The Rules

The most relevant set of rules, when it comes to prize give-aways and competitions on social media, is the CAP Code. This is the rule book for non-broadcast advertisements and direct and promotional marketing communications. It is enforced by the UK's independent advertising regulator, the Advertising Standards Authority (ASA). Little known to many, the CAP Code applies equally to all prize promotions; including those conducted via social media.

Please do note that there are a raft of other potential compliance requirements for businesses to observe when using social media for competitions and giveaways. For example, due regard must be given to the Gambling Act 2005, the Consumer Protection from Unfair Trading Regulations 2008 and, if personal data of entrants is being collected and/or used to target recipients, the EU General Data Protection Regulations (GDPR) and the Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR) .

In addition, social media sites (including Instagram, Facebook and Twitter) often have their own "promotion guidelines"; intended to further regulate the use of their specific platform for conducting competitions and prize draws.

The CAP Code - What should businesses be thinking about?

The rules relevant to holding competitions and prize giveaways on social media within the CAP Code are relatively comprehensive. Some of the key rules businesses are required to comply with are outlined below:

  1. The initial marketing communication (be it an Instagram post or a tweet etc.) should include all significant information that the customer needs to decide whether to participate in the prize draw/competition. This will usually include, for example, how to enter the competition/prize draw; any start and/or closing date and any restrictions on entry. Exemptions may, however, apply where the initial communication is limited by time or space. 
  2. Businesses must also have a full set of terms and conditions for the competition/prize giveaway; addressing matters such as how and when winners will be notified of the results. Whilst these terms need not be outlined within the social media post itself, customers must be able to access them prior to entering the promotion (for example, via hyperlink within the relevant post/linked post).
  3. All entrants should be included in the prize-draw. Having a reliable method of collecting data will be essential here; especially where entry into the competition/prize draw is based on common social media activities such as using hashtags and sharing, liking and retweeting posts.
  4. (Although this would seem obvious) Businesses must actually award the prize!

Helpfully, the ASA has produced some guidance on conducting prize draws via social media. This can be accessed here.

Non-Compliance

Non-compliance with the CAP Code can result in enforcement action being brought against offending businesses by the ASA. Where a complaint is upheld, the consequences are often limited to a warning. In theory, however, it is possible for the "penalty" to be much more severe; including the removal of trade privileges, disqualification from industry awards and/or a referral to Trading Standards.

For an example of a complaint which was upheld by the ASA (against Hard Rock Cafe (UK) Limited) for a failure to indicate that terms and conditions would apply, or to indicate how these could be accessed, see here.

Businesses must also be conscious of the 'downside' of social media where sanctions have been levied – bad publicity can spread like wildfire over social media where customers feel aggrieved or unfairly treated by a brand.

Conclusion

Social media is a powerful tool, and its use by today's businesses for holding competition and prize giveaways continues on an upwards trajectory. With the constantly changing environment, it can be difficult to keep up to speed with the myriad of legal requirements that apply; however, if you want to ensure your business is #trending for the right reasons, it is essential that compliance with the relevant rules is not overlooked.

For more information, please contact David Thompson, Partner in the Commercial team on david.thompson@michelmores.com  or 01392 687656.