One of my favorite aspects of my practice is how it has
connected me to fantastic attorneys and businesses around the
globe. More and more, sweepstakes and contests are global in
nature. Companies around the world reach into other countries for
potential audiences. And social media has "flattened" the
world by enabling customers from all different geographies to
participate in sweepstakes and contests.
That was the case with a recent sweepstakes I worked on with
Connor James. Connor is an Australian lawyer (or
"solicitor," as we attorneys are called in many parts of
the world) with the Permitz Group. We worked together to prepare a
set of official rules for a sweepstakes sponsored by one of his
clients that will be implemented in the U.S. It was an interesting
promotion that involved a trip for two from Australia to New York
City for a concert to benefit a well-deserving charity.
I then asked Conner if he would write a guest post that
describes some of the differences between U.S. and Australian
sweepstakes and contest regulations, with the caveat that we cannot
provide legal advice to our readers. As with
our previous post on Canadian law, some language differences do
crop up: Australians refer to sweepstakes as
Australian sweepstakes: some points of difference
Much like in the U.S., Australia has state-based laws which
regulate sweepstakes (locally known as "competitions").
This article provides a general summary of some of the Australian
requirements and points of difference.
The information in this article is intended to be general in
nature and is not, nor should it be relied upon as, legal advice.
There are a range of Australian obligations to consider when
setting up competitions in Australia, some of which are not covered
Skill and chance
One of the most important distinctions in Australia, as
elsewhere in the world, is between a skill-based competition and a
chance-based competition. A competition that involves an element of
chance in determining the winners will be considered to be based on
chance. If winners are purely determined on the basis of the skill
in their submission, and by qualified judges, the competition would
be considered to be skill-based. If the scope of a potential
entrant's answer is limited and would result in more than one
person getting the correct answer, the competition is likely to be
based on chance.
The above distinction is important in determining if a
competition permit or license is required. National chance-based
competitions require competition permits in at least two Australian
States. Chance-based competitions must also comply with various
requirements, including ensuring that winners are notified in
writing within two days of the draw, that an unclaimed prize draw
is conducted after three months (or earlier if the prize is an
event) if the prize remains unclaimed, and that records are kept of
entries and winners. Prizes must also be appropriate to the age
group of entrants. For example, no alcohol can be awarded for
entrants under the age of 18 (the legal drinking age in
Purchase to enter is okay
There is no restriction on requiring an entrant to purchase a
product or service to enter either a skill- or chance-based
competition in Australia, so long as the purchase price is the
recommended retail price (i.e. prices aren't bumped up). Chance
competitions must still be "free to enter" after the
purchase has been made. However, standard postage costs or premium
text messaging charges of up to 55 cents may be incurred by an
entrant. Australian competitions can have all three of the
following elements: a purchase required to enter, a draw to
determine the winners, and a prize.
Privacy, spam and other consumer
There are a range of privacy, spam and consumer protections that
must be considered when setting up and running a competition in
Australia. Companies must ensure that they comply with these
requirements. For example entrants must understand how, why and for
what purpose their personal information is collected. Australian Consumer Law is the source of many
consumer protections, including some statutory guarantees that
cannot be excluded.
There are significant potential penalties for a company that
fails to comply or fails to obtain competition permits. For
example, a breach of the Australian Consumer Law may result in
penalties of more than $1 million for each breach.
The Permitz Group helps clients with all aspects of Australian
competitions, including drafting terms and conditions, obtaining
competition permits, conducting draws and notifying
winners. Its members work with many leading Australian
companies that rely on them to manage their competitions and help
promote their brand and products.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Federal Court of Australia has held that United States company Valve Corporation, through its online gaming platform, engaged in misleading or deceptive conduct and made false or misleading representations to Australian consumers.
The ACCC will have to prove that the effect or likely effect of the conduct is a substantial lessening of competition.
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