Note on Promotional Competitions

1. Introduction

1. Section 36 of the Consumer Protection Act 68 of 2008 (“the CPA”) and Regulation 11 prescribe a number of requirements for promotional competitions.

1. A promotional competition is defined as any competition, game, scheme, arrangement, system, plan or device for distributing prizes by lot or chance if –
   1. It is conducted in the ordinary course of business;
   2. It is aimed to promote a producer, distributor, supplier or association of any such persons, or the sale of any goods or devices; and
   3. Any prize offered exceeds the threshold prescribed in terms of subsection 11.
2. Sectionn36(11) sets the threshold at R1.00, therefore no competitions will be excluded from the CPA.
3. The CPA seeks to ensure that competitions are fair and transparent and that participants are not misled.

2. The Offer to Participate in the Competition
   1. The offer to participate in the competition can be either:
      1. directly, through any medium;
      2. on a document accompanying any medium contemplated above, such as pamphlets, posters in the store etc;
      3. in any advertisement that is published during the time and throughout the area in which the competition is conducted and draws attention to and is clearly associated with the competition, such as television, print media or online.
   2. A competition starts with an offer to participate. The offer must clearly state –
      1. the benefit to which the offer relates (statement of the prize);
      2. the steps required to accept the offer to participate (how to enter the competition);
      3. the basis on which the results of the competition will be determined (by way of draw or assessment);
      4. the closing date for the competition;
      5. the medium through which the results of the competition will be made known (how are winners announced and will they be contacted directly);
      6. where the competition rules and prize may be obtained/received (where are the competition rules displayed and must prizes be collected or will they be delivered).

3. Rules
   1. Section 36(3)(c) of the CPA requires the company to prepare competition rules, make the rules available to the National Consumer Commission (“the NCC”) and any participant on request and at no cost and to retain the rules for three years.
   2. The rules can be made available to a participant on the entry form itself, in the advertisement or on the website.
   3. The rules should include:
      1. Who may enter;
      2. How to enter;
      3. Opening and closing dates;
      4. How prize winners are determined;
      5. What the prizes are comprised of;
      6. How prizes are awarded;
      7. If or how prizes may be forfeited;
      8. Consequences of non-compliance with the rules; and
      9. Limitation of liability.
   4. Prize winners should be required to sign a statement confirming that:
      1. The selection took place by random draw/assessment and their entry was chosen;
      2. They are aware of, have complied with and will continue to comply with all the rules; and
      3. They do not fall into the category of persons contemplated in section 36(3)(b)(ii).
   5. In terms of Regulation 11(3), the prize winner cannot be forced to permit the use of his/her image in marketing material, participate in any marketing activity, be present at the draw or when winners are announced. The prize winner can be requested to participate in marketing but has the right to decline and must be informed of his/her right to decline.
   6. Prize winners must be independent. In order to ensure that this requirement is met, it is a good idea to get participants to confirm that they are not related to the company or the supplier of the prize and get the prize winner to sign a statement that they have complied with the competition rules.
   7. An independent accountant, registered auditor attorney or advocate must oversee and certify the conducting of the competition and the company must report this through the internal auditor. The independent person overseeing the competition should attend the draw and confirm that it was impartial, fair and in accordance with the rules. The independent person should sign a statement stating that he/she attended the draw, he/she read the rules and complied with any rules that applied to them, is not a person contemplated in section 36(3)(b)(ii) of the CPA and to the best of their knowledge the selection process was fair, transparent and unbiased.

4. Record Keeping
   1. Regulation 11(6) requires a person conducting a competition to keep the following records for at least three years:
      1. Full details of the promotor, including the registration number, address and contact numbers.
      2. The rules of the competition.
      3. A copy of the offer to participate in the competition.
      4. The names and ID numbers of the persons responsible for conducting the competition.
      5. A full list of prizes offered in the competition.
      6. A representative selection of materials marketing the competition or an electronic copy thereof, provided that the electronic copy is easily accessible in a generally available format.
      7. A list of all instances when the competition was marketed, including details of the dated, the medium used and places where the marketing took place.
      8. The names and Id numbers of persons responsible for conducting the selection of prize winners in the competition.
      9. An acknowledgment of receipt of the prize signed by the prize winner, their Id number and the date of receipt of the prize.
      10. Declarations by the person conducting the selection of prize winners, under oath, that the prize winners were to their best knowledge not directors, employees, agents or consultants or associated with the company or marketing service providers in respect of the competition, the spouses, life partners, business partners or immediate family members.
      11. The basis on which the prize winners are determined.
      12. The summary describing the proceedings to determine the winners, including the names of the persons participating in determining the prize winners, the date and place where that determination took place and whether those proceedings were open to the general public.
      13. Whether an independent person oversaw the determination of the prize winners, his/her name and ID number.
      14. The means by which the prize winners were announced and the frequency thereof.
      15. A list of the names and ID numbers of the prize winners.
      16. A list of the dates when the prizes were handed over or paid to the prize winners.
      17. In the event that a prize winner could not be contacted, the steps taken to contact the winner or otherwise inform them of their winnings/prize.
      18. In the event that a prize winner fi not receive or accept the prize, the reason therefor and the steps taken to hand over the prize to that prize winner.

2. The Offer to Participate in the Competition
   1. The offer to participate in the competition can be either:
      1. directly, through any medium;
      2. on a document accompanying any medium contemplated above, such as pamphlets, posters in the store etc;
      3. in any advertisement that is published during the time and throughout the area in which the competition is conducted and draws attention to and is clearly associated with the competition, such as television, print media or online.
   2. A competition starts with an offer to participate. The offer must clearly state –
      1. the benefit to which the offer relates (statement of the prize);
      2. the steps required to accept the offer to participate (how to enter the competition);
      3. the basis on which the results of the competition will be determined (by way of draw or assessment);
      4. the closing date for the competition;
      5. the medium through which the results of the competition will be made known (how are winners announced and will they be contacted directly);
      6. where the competition rules and prize may be obtained/received (where are the competition rules displayed and must prizes be collected or will they be delivered).

3. Rules
   1. Section 36(3)(c) of the CPA requires the company to prepare competition rules, make the rules available to the National Consumer Commission (“the NCC”) and any participant on request and at no cost and to retain the rules for three years.
   2. The rules can be made available to a participant on the entry form itself, in the advertisement or on the website.
   3. The rules should include:
      1. Who may enter;
      2. How to enter;
      3. Opening and closing dates;
      4. How prize winners are determined;
      5. What the prizes are comprised of;
      6. How prizes are awarded;
      7. If or how prizes may be forfeited;
      8. Consequences of non-compliance with the rules; and
      9. Limitation of liability.
   4. Prize winners should be required to sign a statement confirming that:
      1. The selection took place by random draw/assessment and their entry was chosen;
      2. They are aware of, have complied with and will continue to comply with all the rules; and
      3. They do not fall into the category of persons contemplated in section 36(3)(b)(ii).
   5. In terms of Regulation 11(3), the prize winner cannot be forced to permit the use of his/her image in marketing material, participate in any marketing activity, be present at the draw or when winners are announced. The prize winner can be requested to participate in marketing but has the right to decline and must be informed of his/her right to decline.
   6. Prize winners must be independent. In order to ensure that this requirement is met, it is a good idea to get participants to confirm that they are not related to the company or the supplier of the prize and get the prize winner to sign a statement that they have complied with the competition rules.
   7. An independent accountant, registered auditor attorney or advocate must oversee and certify the conducting of the competition and the company must report this through the internal auditor. The independent person overseeing the competition should attend the draw and confirm that it was impartial, fair and in accordance with the rules. The independent person should sign a statement stating that he/she attended the draw, he/she read the rules and complied with any rules that applied to them, is not a person contemplated in section 36(3)(b)(ii) of the CPA and to the best of their knowledge the selection process was fair, transparent and unbiased.

4. Record Keeping
   1. Regulation 11(6) requires a person conducting a competition to keep the following records for at least three years:
      1. Full details of the promotor, including the registration number, address and contact numbers.
      2. The rules of the competition.
      3. A copy of the offer to participate in the competition.
      4. The names and ID numbers of the persons responsible for conducting the competition.
      5. A full list of prizes offered in the competition.
      6. A representative selection of materials marketing the competition or an electronic copy thereof, provided that the electronic copy is easily accessible in a generally available format.
      7. A list of all instances when the competition was marketed, including details of the dated, the medium used and places where the marketing took place.
      8. The names and Id numbers of persons responsible for conducting the selection of prize winners in the competition.
      9. An acknowledgment of receipt of the prize signed by the prize winner, their Id number and the date of receipt of the prize.
      10. Declarations by the person conducting the selection of prize winners, under oath, that the prize winners were to their best knowledge not directors, employees, agents or consultants or associated with the company or marketing service providers in respect of the competition, the spouses, life partners, business partners or immediate family members.
      11. The basis on which the prize winners are determined.
      12. The summary describing the proceedings to determine the winners, including the names of the persons participating in determining the prize winners, the date and place where that determination took place and whether those proceedings were open to the general public.
      13. Whether an independent person oversaw the determination of the prize winners, his/her name and ID number.
      14. The means by which the prize winners were announced and the frequency thereof.
      15. A list of the names and ID numbers of the prize winners.
      16. A list of the dates when the prizes were handed over or paid to the prize winners.
      17. In the event that a prize winner could not be contacted, the steps taken to contact the winner or otherwise inform them of their winnings/prize.
      18. In the event that a prize winner fi not receive or accept the prize, the reason therefor and the steps taken to hand over the prize to that prize winner.