Prize giveaways & competitions

Prizes, giveaways and competitions can be great ways to advertise your products—consumers love nothing more than a chance to get something free! However, as with all advertising and promotion, it is important that you are honest in your dealings with consumers. Offering prizes without the intention to actually give them away is a serious offence.

It is important that you keep your promises and abide by the terms of your own offer. If you use gifts or prizes as a promotional activity, ensure that consumers have a fair chance of being 'in the running' for these prizes, or of recieiving the gifts or free items.

This includes ensuring that the actual items given away are the same as the ones you promise to consumers.  Promises are not kept if the items are not provided or if what is given is different from what was originally offered. If prizes are to be used as an inducement, there must be no misleading statements or hidden catches about them. Examples are:

• the offer of a prize did not inform consumers about the requirement to pay the shipping and delivery costs for the goods
• the cost of the ‘free’ item promised is actually already included in the price being paid—for example, where ‘free’ updating is offered with a publication, but the price paid is the same as that normally paid for the publication, which includes the updating service as a matter of course
• when a prize is offered but actually it is only the further chance of winning such a prize that is given.
  

If you want to offer gifts, prizes or free items as a promotional activity for your business, ask yourself the following questions to ensure you are complying with the law:

• Do the promises made about the gift, prize or free item match what will be given?
• If limitations or conditions apply has the advertiser or seller told consumers about them?
• Is there a catch in the offer?

Which sections relate to prize giveaways & competitions?

Section 32 of the Australian Consumer Law, which is contained in a schedule to the Competition and Consumer Act 2010, states that advertisers and sellers must honour their promises to give gifts, prizes or other free items in connection with their promotion of supply or possible supply of goods and services. This specific prohibition is additional to the more general prohibition on misleading and deceptive conduct in section 18 of the Australian Consumer Law.

For further information regarding your advertising, selling and promotional activities—including the offering of gifts and prizes, please refer to the ACCC's Advertising and Selling publications.