There are five basic issues you need to deal with to make sure your social media competition complies with applicable laws and protects your company from liability.
Social media users are increasingly using their social media networks to engage with businesses. Around 32% of users are now using social media to follow particular businesses or brands (up from 25% in 2013) and 29% doing so for the purpose of accessing offers and promotions (up from 15% in 2013). Indeed, when social media users are asked what they want to receive from the businesses which they follow using social media, 51% wanted "giveaways", second only to "discounts" (62%).1
Given these figures, it is unsurprising that Australian businesses are increasingly using social media competitions as part of their broader marketing strategy. What then are the key issues which need to be considered by in-house counsel when reviewing proposed social media competitions?
1. Remember the basics
The fact that your competition is being run online or using a social media platform does not alleviate the need to consider, and ensure compliance with, all applicable laws in the jurisdictions in which the competition is to be run.
At the Commonwealth level, those laws include sections 18 and 29 of the Australian Consumer Law (ACL), which prohibit misleading or deceptive conduct and making false or misleading representations. The Australian Competition and Consumer Commission (ACCC) is prioritising its monitoring and enforcement activities in the online marketing space and has published guidelines to help businesses conduct their social media activities in a manner which complies with the ACL.
At the state and territory level, there are various statutory regimes setting out how certain competitions should be conducted. 2 Generally speaking, these regimes apply where the competition involves an element of chance; for example, where the user simply has to "like" a page or post to enter into a draw for a prize. However, they can also apply where the competition involves both skill and chance, such as a "first correct answer wins" format. The obligations under these laws vary, but can include requiring an organisation to obtain a permit to run the competition.
Businesses should also consider the requirements of relevant industry rules or codes. By way of example, the Advertising Standards Bureau may consider that certain social media promotions are required to comply with the Code of Ethics of the Australian Association of National Advertisers.
Some social media platforms have specific terms relating to competitions. For example, in the case of Facebook, the competition's terms and conditions must include a complete release of Facebook by each participant and an acknowledgement that Facebook does not sponsor, endorse or administer the competition. Others, like Twitter, rely on their general rules, but provide guidelines on how businesses can avoid breaching those rules when conducting a competition.
3. Adopt clear and concise terms and conditions
The terms and conditions for a competition will, to a large extent, be influenced by the type of competition contemplated and the social media platforms it will use. Each of the state or territory regimes for competitions requires that certain terms be included in the terms and conditions. The social media platform may also require the inclusion of certain terms.
An exhaustive discussion as to what should be included in the terms and conditions for a social media competition is beyond the scope of this article. However, generally speaking, businesses should ensure that the terms and conditions for any online competition include:
- any restrictions on entrants, including the location of entrants (which will assist with identifying and complying with applicable laws);
- a clear statement outlining the rules of the com- petition, including how to enter, how winners are selected, the prizes on offer, and the opening and closing dates and times of the competition;
- appropriate limitations on liability; and
- a suitable mechanism by which entrants becomes bound to the terms and conditions.
4. Ensure you have a robust social media policy and that you comply with it
Social media competitions are conducted in the public arena and in a way which enables participants to enter at any time until the competition closes. Accordingly, it is imperative that businesses have suitably robust social media policies in place which address:
- who is responsible for moderating the business' social media accounts, and when;
- the scope of the moderator's authority — whether to monitor and report only, or whether they are authorised to remove inappropriate content or engage with participants; and
- the business' crisis management plan for dealing with urgent and potentially serious instances of misuse by participants.
Having an appropriate social media policy is an important consideration generally. The ACCC's guidelines on social media use by businesses8 suggest that the time a business spends moderating its social media accounts should be proportionate to the size of the business and the number of followers. However, in the competitions space, ensuring appropriate moderation assumes greater importance, particularly where the competition involves the solicitation of responses or where it is expected that the number of followers will increase significantly.
5. Consider your obligations under the Privacy Act
The Privacy Act 1988 (Cth) prescribes how an applicable organisation may collect, store, use and disclose an individual's personal information. This is done primarily by way of the Australian Privacy Principles (APPs). In this context, APP 7 is of particular relevance as it contains a general prohibition against the use of an individual's personal information for direct marketing purposes subject to certain exceptions. The primary exception is where:
- the personal information is collected directly from the individual;
- the individual would reasonably expect that the organisation would use their personal information for direct marketing purposes;
- the organisation provides a simple means by which the individual can opt out of receiving future direct marketing materials; and
- the individual has not previously opted out.
Competitions, including those conducted via social media, are often designed to allow a business to grow its marketing lists. If a particular competition has been set up so that the business collects personal information for direct marketing purposes, steps will need to be taken to ensure that the collection of that information, and the use of that information for direct marketing purposes, is permitted by the Privacy Act.
As the use of social media as a platform for competitions increases, businesses need to give careful thought to structuring their competitions in a manner which complies with applicable laws and sufficiently protects the company from liability. Taking heed of the five key issues referred to in this article will go a long way to ensuring your organisation's next social media competition is a success.
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1Sensis, 2014 Yellow" Social Media Report, May 2014, p 41.
2 Gaming and Wagering Commission Act 1987 (WA), Lotteries and Art Unions Act 1901 (NSW), Gambling Regulation Act 2003 (Vic), Charitable and Non-Profit Gaming Act 1999 (Qld), Lottery and Gaming Act 1936 (SA), Gaming Control Act 1993 (Tas), Lotteries Act 1964 (ACT), Gaming Control Act 1993 (NT).
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.