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17.01.2017

Guide to conducting online prize competitions

Given the uncomplicated design of their opportunities to partici­pate, prize competitions are a very popular advertising medium, especially on the Internet, in order to draw consumers’ attention to a specific business activity or a specific product. The Internet offers the special advantage that conducting prize competitions is simple and inexpensive. In addition, a multitude of potential cus­tomers can be approached in a general or targeted manner. In addition, in a simple manner, the number of “likes” on online platforms can be increased, and the subscriber base for e-mail newsletters can be enlarged, thus facilitating future communica­tion with customers.

Although the regulatory environment regarding the requirements for prize competitions has been significantly liberalized in recent years, one must not lose sight of the legal requirements, particu­larly with regard to laws against unfair commercial practices and laws on data protection. It should be noted that there are still some legal uncertainties in this area. For this reason, this article attempts – without claiming to be complete – to make recommen­dations for a legally secure approach and to point out the current risks and legal uncertainties.

Requirements for conditions of participation

For electronic commerce, § 6, para 1, no. 4 of the German Telemedia Act (Telemediengesetz) requires that contests and prize competitions of an advertising nature must be clearly identifiable as such, and that the conditions of participation are easily acces­sible and clearly and unambiguously stated. Thus, the organizer of a prize competition should provide the conditions of participation in direct spatial connection with any advertising of the online prize competition.

Such conditions of participation should provide rules regarding the following items in particular:
  • time period of participation in the prize competition
  • manner of communication for participation and notification of winners
  • presentation of the winning mechanism
  • description of the winnings
  • age limitation
  • sufficient data protection consent(s)
  • exclusion of recourse to legal action

Linking of the prize competition with a purchase of goods

In many cases, the coupling of prize competitions with a legal ob­ligation to purchase may now be permissible. However, in special circumstances (for example, in the case of a competition targeted at minors), such a prize competition is still an unfair commercial practice, and therefore impermissible. Thus, an in-depth legal review of the prize competition mechanism and the conditions of participation is still necessary.

Linking of the prize competition with a newsletter registration

Moreover, the linking of a prize competition with a newsletter registration may be legally permissible, if certain requirements are met. It is also impermissible for minors to be specifically targeted. Whether, for adults, prior registration to a newsletter may be made compulsory for participating in the prize competition has not been conclusively clarified. However, good reasons speak for permis­sibility, to the extent that requirements established as part of participation are adhered to.

The following items should be considered in each case:
  • When registering for the prize competition, an express con­sent for the receipt of the newsletter must be given by means of the “opt in”; that is, by mean of a “tickbox” that is not previously ticked. In addition, the option of revoking must be clarified.
  • This consent must be obtained separately and independently; that is, the consent for the e-mail newsletter advertising may not be requested with other (consent) declarations.
  • If a participation in the competition requires an application for the newsletter, in addition to the conditions of participation, this mechanism must be previously clarified in a comprehensive and understandable manner.

Conclusion:

Holding online prize competitions is highly attractive and effective for companies. However, the legal requirements are often difficult to understand. For this reason, the risk of exposure to warnings from competitors or consumer protection authorities is far higher than other promotions.

Authors

Johannes Schäufele

Johannes Schäufele

Counsel

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