Running a competition is a tried and tested way for small business owners to raise brand awareness. Grid Law founder David Walker guides a Business Advice reader through the rules around judged prize competitions to keep the contest legally compliant.
I came across your article on international prize competitions.
Firstly thank you for the article, it was very informative and straight to the point.
I’m looking to run a competition soon and am looking for some further advice in negotiating my way through this potential minefield.
The competition would be to design a guitar and the winner would get their design developed and built. I design and hand craft guitars as my business, so the purpose of this competition is to raise awareness of what I do.
I would like to charge a small entry fee to cover our costs and ideally open it to any age. As we have a decent international social media following I would also like to open it to any country. However, on looking into the technicalities it quickly became an apparent minefield, as I’m sure you are aware.
Entrants would be free to design any shape they wanted. However, one of the scoring criteria is “constructability” i.e. can it be made using standard/accepted techniques? No professional design experience is needed but the expectation would be that entrants should have a decent understanding of guitars and their build features.
For the judging, the plan would be for us to whittle it down in house to the final five entries, then have those finalists judged by an independent panel of industry experts.
I’m trying to find out what exactly what we can legally do and what we need to do without spending a fortune on legal fees.
What initially sounds like a nice thing to offer quickly becomes a bit of an ordeal, so I guess I’m looking for some advice on how much is involved before I make the decision as to whether or not it’s going to be worth it.
Thank you for your question.
Yes, staying “legal” when it comes to prize promotions can seem like a minefield but if you approach this in a logical and methodical way, it doesn’t have to be.
First, we have to look at the type of prize promotion you are running. This is clearly going to be a prize competition (rather than a free prize draw) as entrants are paying to enter and they must exercise significant skill, knowledge and judgement to be in with a chance of winning.
If this is run as a true prize competition you should fall outside the remit of the Gambling Commission. The Gambling Commission are there to ensure that competitions such as this aren’t illegal lotteries. I don’t think you will have any concerns with this.
The main reason why a prize competition would be considered to be an illegal lottery is if the skill element was insufficient. For example, if the competition used a multiple choice question or the answer could be easily found from a quick search on Google.
Next, you have to be clear about the process of entering the competition. So, should entries be submitted via email as a pdf document or posted to you? Can entrants submit more than one design? Also, be clear about the closing date of the competition and when / how the winners will be notified.
You will then have to explain your scoring criteria and explain what the judges are looking for when choosing a winner. You will want to avoid future disputes so in your competition rules it will be important to state that the judges’ decision is final and no correspondence will be entered into.
The Cap Code
The Advertising Standards Authority’s (ASA’s) Cap Code says, at section 8.26:
“In competitions, if the selection of a winning entry is open to subjective interpretation, an independent judge, or a panel that includes one independent member must be appointed. In either case, the judge or panel member must be demonstrably independent, especially from the competition’s promoters and intermediaries and from the pool of entrants from which the eventual winner is picked. Those appointed to act as judges should be competent to judge the competition and their full names must be made available on request.”
So, as you are the promoter of the competition, I wouldn’t narrow down the entries in house. Leave this to the judges.
If you really want to open the competition to entrants under the age of 18, we will need to look at the specifics of the competition and how you promote it in more detail. This is because the rules on adverts targeting children are much stricter. Also, the law relating to children entering in contracts (i.e., how they accept your competition terms and conditions) will have to be carefully considered.
Read more about running a prize draw or competition:
- How GDPR could affect your promotional prize draws and competitions
- Am I legally required to offer free entry when holding a prize draw?
- Understanding the rules around promotional brand giveaways
Having the competition open to international entrants also adds another level to the complexity. As I said in my earlier article, you need to comply with the local laws in each country. So, look at your social media following and decide where you are most likely to receive entries from. It may be that compliance in these countries is relatively easy. For example, some countries have very similar laws to ours but just require you to have a “free entry” route where no payment to enter is necessary.
Intellectual property issues should be relatively straight forward to deal with and they will have to be clearly set out in your competition rules/terms and conditions of entry.
First, and most importantly, you will need to make it clear that all entries must be the entrant’s own, original work. They must not copy anyone else’s design and you will not accept any liability if they do.
You then need to decide who will own the rights in the design. Will the entrant retain them or will they be assigned to you? If the entrant owns the rights you will need a licence to use them to make the guitar and I imagine you will want permission to use images of it when it is complete.
It’s likely that the shape of the guitar could be protected as a registered design. Whether you or the entrant decides to protect it is a matter of personal choice and will likely be determined by the commercial potential for the design.
You will be collecting and processing personal data to administer the competition so you must comply with the GDPR and other data protection legislation.
Think about what information you need and the purposes for which you will be using it. For example, you will need to know the entrant’s name and you will need a method of contacting them, i.e., email or telephone. But what additional personal information do you need?
If you are planning to send promotional materials to the entrants after they have entered, you must clearly state your intention to do so. You must also decide how long it is necessary to keep the data for its intended purpose.
When it comes to promoting the competition, you will again have to comply with the ASA’s Cap Code and also the rules of any platform you are advertising on, for example Facebook.
If you really want to run this competition, please don’t let all the compliance issues put you off. As I said, if you carefully think through all the aspects of the competition and deal with them in a logical and methodical way they should be relatively straight forward to deal with.
If you need and further help with this or have any other questions, please feel free to email me again.
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