Is your business currently running a promotional competition? Will the competition still be open for entries after 31 March 2011? If so, you need to make sure that you know what legislation you must comply with.

Up to now, promotional competitions have been governed by the Lotteries Act, 1997. Despite the Lotteries Act’s detailed regulation of promotional competitions, one still encounters competitions that do not comply with the Lotteries Act. In fact, many people do not even realise that their promotional competitions must comply with the law. Organisers are often not aware that a promotional competition will be unlawful if entrants must pay to enter into the competition and the payment is in addition to the price paid for the goods or services to which the competition relates.

From 31 March 2011, there will be a significant change in the laws governing promotional competitions. This is because the Consumer Protection Act, 2008 (the “CPA”) will replace section 54 of the Lotteries Act which currently governs promotional competitions. As a result, it will be prudent for anyone that is currently running a competition to make sure that they comply with both the Lotteries Act and the CPA, if the competition will still be open when the CPA comes into force. Also, if businesses are planning to conduct a promotional competition at any time after 31 March 2011, they must inform themselves about the new legislation that will govern promotional competitions.

The CPA states clearly that the promoter of a promotional competition may not require payment from any participant, other than “the reasonable costs of posting or otherwise transmitting an entry form or device”. The organiser must also prepare competition rules which comply with the CPA’s detailed requirements.

The CPA’s provisions appear to simplify the regulation of promotional competitions and have given clarity on some issues that arose under the Lotteries Act. However, businesses must make sure that they understand what the legal requirements for competitions will be in the future. If they contravene the CPA’s provisions they may have to face the new Consumer Commission and there might even be penalties involved.