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Promotional competitions and the CPA

Promotional competitions and the CPA

Since the Consumer Protection Act (CPA) 68 of 2008 has come into effect, promotional competitions now falls within the sphere of the CPA and must conform to certain mandatory requirements to be legal and valid.

This article discusses the impact of the CPA on promotional competitions by answering frequently asked questions:

How has the CPA changed the way in which promotional competitions are conducted?

The CPA restricts the way in which promotional competitions are conducted. Section 36 and Regulation 11 of the CPA specifically regulates the requirements for competitions. Section 36 applies to games and other similar arrangements used for promotional purposes, irrespective of whether a participant is required to demonstrate any skill or ability before being awarded a prize.

In terms of the definitions of the CPA, a prize includes a reward, gift, free goods or service, price reduction or other free benefit.

What conduct are prohibited by promoters when marketing a promotional competition?

In terms of Section 36, no person may inform another person that he or she has won a competition or a prize, if:

  1. No competition has been conducted.
  2. The person has not won the competition or prize.
  3. The prize was made generally available.
  4. The prize for a competition is subject to a previously undisclosed competition.
  5. The person is required to buy something or pay something for the prize.

What costs may the promoter charge for a promotional competition?

The promoter of a competition is allowed to require the payment of reasonable costs of posting or otherwise transmitting an entry form, which is set at R1.50.

What persons are prohibited from participating in a competition?

The following persons are prohibited from entering and participating in a competition:

  1. Directors;
  2. Members;
  3. Partners or agents of the promoter or any other person similarly connected; and
  4. A supplier of goods or services in connection with that competition.

What must the promoter of the competition do before the competition can commence?

The promoter of the competition must:

  1. Prepare competition rules before the commencing of the competition.
  2. Make the rules available to the Commission and any participant, on request and without any cost.
  3. Keep a copy of the rules.

Furthermore the offer to participate in the promotional competition must clearly state the benefit or competition to which the offer relates and provide the following details:

  1. What the person must do to participate in the competition.
  2. How the competition results will be decided.
  3. The competition’s closing date.
  4. How the results will be made known.
  5. How the prize can be collected.

Does all promotional competitions fall within the sphere of the CPA, and have to comply with the above criteria?

The Minister may exclude competitions with low-value prizes from the CPA. Low-value prizes is set at R1.00.

Out of the discussion above, it is clear that promotional competitions now falls wihin the ambit of the CPA and has to conform to certain legal requirements in order to be valid and legal.

ABOUT THE AUTHOR

Dennis Rhabe is an admitted attorney currently working at SEESA Consumer Protection & POPI at our Cape Town office since March 2012. He obtained his LLB degree from the University of Cape Town and is currently completing his postgraduate diploma in Compliance Management at the University of Johannesburg. Prior to working for SEESA, he worked as an attorney specializing in general litigation matters.

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