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Part 3: What Are The Legal Requirements For Running A Competition On Facebook?

This is the third in a six post series, aimed at assisting businesses to effectively run competitions on Facebook. In case you missed them, the other posts are:

Please note, that the information provided in this post is a guide only. This guide is accurate at the time of publishing and based on my research of the various authorities throughout Australia that govern trade promotions and lotteries. I would encourage you to do your own research specific to your competition to validate the guidance I have provided prior to you prior to running a competition on Facebook for your business.

Legal Rules For Facebook Contests In Australia

When running a competition on Facebook, you are responsible for following the appropriate rules and applying for any necessary permits, even if it’s not your product or services you are giving away.

In general, for competitions promoting a business's good or services that conducted in Australia, to avoid permits, you should keep the total prize pool less than $5,000. However, there are different laws and permit requirements in each State. For example, in some States you will require a permit regardless of the value of the prize and in all States require you to adhere to laws around the supply of prohibited or restricted goods like alcohol and tobacco.

To assist in achieving your business goals, ensuring you comply with any legal requirements and reducing permit costs associated with running your competition, it is best to restrict entry geographically to only those areas where the highest proportion of your customers reside.

You can find more details on the regulations from the various authorities that govern trade promotions and lotteries throughout Australia here:

Game Of Chance

A game of chance is a competition draw or sweepstakes where the winner is drawn “at random”.  If you are running a random draw competition on Facebook, then the requirements for a permit will depend on who is eligible to enter your promotion. If your competition entrants are Australia wide, then it is more than likely that you will require a permit from NSW and ACT to conduct a random draw.

Game Of Skill

A game of skill is a competition that is judged. Some examples include asking entrants to:

  • Write a short answer or essay (e.g. Using 25 words or less, describe why you deserve the prize the best);
  • Complete a quiz; or
  • Upload a photo or video

Each entrant is then judged on merit, either by an appointed judging panel or some sort of voting system, with the prize being awarded to the entrant with the highest score or number of votes.

What Are The Legal Requirements For Running A Competition On FacebookTherefore a game of skill cannot be where everyone could give the same answer, such as “Who won the 2012 AFL Grand Final?”, unless of course there is another question in addition to this that everyone who answered the first question correctly also has to answer as well as part of the judging criteria.

If you are running a competition that is a ‘game of skill’ (i.e. judging entrant solely on the strength of their entry) then you most likely will not require a permit. However, you will still need to comply with the appropriate rules for each State within Australia that you are allowing entrants from.

It should also be noted that you cannot get around ‘game of chance' permit requirements by conducting a game of skill (e.g. 25 word or less question) and then drawing a winner randomly. If you did, it would considered a ‘game of chance’ or ‘random draw’ and the game of skill legal requirements would need to be adhered to.

You should either apply for the appropriate permits or restrict entry to your competition. For example, you could make anyone that reside outside the areas that you have obtained permits for the competition from ineligible to enter.  This could mean restricting certain countries or States as part of the Terms and Conditions of your competition. Just make sure you collect that information as part of the entry and then remove anyone that doesn’t comply with those restrictions (as not everyone reads the fine-print).

Terms & Conditions

For legal compliance, you will need to get your competition entrants to acknowledge and agree to abide by the Terms and Conditions for your competition. As a guide, your competition's Terms and Conditions should include the following information:

  • The name of the competition;
  • Commencement date and time;
  • Date and time entries must be received by to be eligible;
  • Who is ineligible to enter (e.g. employees and families, age restrictions or certain locations to avoid other applicable laws);
  • What people need to do to enter;
  • Details of the prizes and their value (including conditions relating to redeeming, accepting or using the prizes, e.g. “Prize is not redeemable for cash”, “Prize is not transferable” or “If for any reason the agreed prize is not available, a product of equal or greater value will be provided”, if any of these are relevant);
  • How, when and where the draw or judging will take place.
  • How prizes will be awarded;
  • How and when prize winner will be notified;
  • Method for claiming prizes (including any requirement for entrants to be present at the draw);
  • How the results will be published;
  • What will happen in the event that the winner is not contactable (i.e. an unclaimed prize draw);
  • How the information collected will be used; and
  • Contact details for the business conducting the competition (i.e. Business name, address, phone number and ABN).

When conducting competitions on Facebook, as well as complying with legal requirements, you must also make sure that your competition complies with Facebook's Competition Guidelines. You can read more about these in the next post in this series where I answer the question “What Are The Rules For Running A Competition On Facebook? 

About Loren Bartley

Loren Bartley is as a social media strategist, educator, coach, public speaker, blogger, early adopter, self-confessed lover of all things geek-eske, and mother of three.

As the founder of Impactiv8, Loren helps businesses grow using the power of social media and lifecycle marketing automation.

Loren has created three online training programs: Social Media Success, FB Business Success and Linked Business Success and she also offers bespoke social media presentations, workshops, one-on-one coaching and social media implementation services.

Loren is also the producer and co-host of the highly successful #BusinessAddicts The Podcast, which she hosts in conjunction with Fiona Redding from The Happiness Hunter.

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