Consumer competitions: what is the right legal way to deal with them?

It is a unique way for a manufacturer or retailer to become widely known in a matter of hours or days. They promise tempting prizes and fans on social media add likes, tag friends and start following new profiles. Internet contests simply entice and entertain them. But how to run them correctly from a legal perspective?

muž vyhrál v soutěži na internetu
7 minutes of reading

Chapters of the article

The dreaded competition

Consumer competitions used to be a bit feared by some of their organisers. Not perhaps in terms of effect and outcome, but rather because the organisers were unsure whether they were doing everything right and whether their approach was open to challenge. In fact, the earlier legislation was quite strict.

Under it, consumer lotteries that met the legal characteristics prohibited at the time were not permissible: the prize is purely random (e.g. a draw) and the individual prize is worth more than CZK 20 000. One way of getting around the strict conditions was to give the competition at least the appearance that not everyone could win. It was enough, for example, to ask a “knowledge” question such as “of the Czech historical figures was burned a) Master Jan Hus b) Saint Wenceslas c) Charles IV.” and the competition could be considered knowledge-based and not random. However, even after answering the question, it was not possible to select the winner by a mere draw.

spotřebitelské soutěže

Tip: CTIA statistics indicate that 80% of the audited entities were found to have some kind of defect and the most frequent source of problems were commercial and warranty conditions. What errors in e-shop terms and conditions do we encounter almost daily and what should you look out for? This is the subject of our article.

What is the current legislation?

Two things were clear to the legislators: the rules they set are regularly circumvented by sellers and marketers and, moreover, there is no danger from consumer competitions as there is from gambling.

Consumer competitions are currently governed by the Consumer Protection Act, which considers a marketing competition to be a commercial practice.

The Consumer Protection Act states that a consumer competition is a contest, poll or other prize event held for consumers in direct connection with the promotion, offer or sale of a product or service of the seller, in which the seller or a person authorised by the seller undertakes to pay prizes, whether monetary or non-monetary, to participants selected at random, and in which participation is conditional on the purchase of a product or service and proof of that purchase to the seller, or the conclusion of a contractual relationship with the seller of the product or service, or the participation of the consumer in a marketing event of the seller, even indirectly through another person.

In particular, the legislation prohibits two main types of unfair commercial practices:

  • misleading practices, which may consist of deceptive acts (providing incorrect information) or omissions (failing to communicate important information)
  • aggressive practices, which aim to force you to buy.

All unfair or deceptive practices can be sanctioned and punished by the Czech Trade Inspectorate with heavy fines of up to CZK 5,000,000.

In consumer competitions, it is also important to ensure that the competition is not based on any deposit or financial payment by the customer, as this could constitute gambling. However, the purchase of a product is not considered to be a financial consideration in this respect.

Do you need to write terms and conditions for a consumer competition?

Do you want to write terms and conditions for consumer competition that comply with the law? Don’t risk fines from the Czech Trade Inspection Authority and contact us.

How can consumer competition be misleading?

Generally, a commercial practice is considered unfair if it is contrary to the requirements of professional care and substantially distorts or is likely to substantially distort the economic behaviour of the consumer.

In the case of consumer competitions, it is a deceptive commercial practice if, for example, the rules of the competition are broken, the promised prizes are not paid or there was no intention to reward the winner. It is also a deceptive practice if the promoter influences who wins the prize, for example by cheating in the draw.

Do not underestimate the rules

The contest rules serve as the basic document that governs the entire contest. It is important that they are written clearly and clearly. It is also essential that these terms and conditions are publicly available on the website or social media during the duration of the competition. Any changes to the terms and conditions must be duly notified to the participants.

Set out in detail in the rules who can enter the competition, how the winner will be selected, what the prize entails and any grounds for disqualification. It is also important to include the protection of entrants’ personal data (GDPR) and ensure they consent to the processing of their data.

Specifying how the prize will be handed over is also essential. For smaller prizes, sending by post may be appropriate, while more valuable prizes should be handed over in person, which can be used for promotional purposes. In this case, the winner’s consent should be obtained, for example through a contract that allows for photography or filming during the prize presentation.

In the context of promotion, particular care should be taken to avoid misleading information about prizes. Promotional material should only show the prizes that the contestant can win. Illustrative photos are not excluded, but should be properly labelled as such.

Specific rules may then apply to competitions on individual social networks. It is therefore still necessary to properly read the rules of Facebook, Instagram or any other network you use.

The rules must not exclude certain consumer groups from the competition without obvious reasons, e.g. women, non-Czech citizens, etc. This could constitute discrimination against consumers. On the contrary, it is common to exclude employees of the organiser from the competition. Similarly, it is permissible to exclude, for example, persons under the age of 18 if the organiser of the competition is, for example, an alcohol producer or a nightclub.

Tip: Have you been put at a disadvantage in a hotel, shop or restaurant just because you belong to a certain nationality or have a darker skin colour? Are there situations where a business can afford to do this? How far does the freedom of enterprise and the autonomy of the will of entrepreneurs extend and what can already be considered discrimination against consumers? We have addressed this in a separate article.

Winners should pay taxes

Winners of prizes in excess of CZK 10,000 should pay a tax of 15%. It is advisable to inform the contestant of such an obligation in the terms and conditions of the contest. If the prize does not exceed CZK 10,000, you do not have to deal with tax obligations at all.

It must not be gambling

A consumer competition must not be described as gambling within the meaning of the Gambling Act. It must therefore not meet the following statutory characteristics:

  • the bettor places a stake in a game of chance in the form of a game, wager or lottery ticket, the return of which is not guaranteed, and at the same time
  • the winning and losing of the game is determined wholly or partly by chance or unknown circumstances. A game of chance shall be a consumer competition which satisfies both of these conditions cumulatively.

A wager does not mean the purchase of goods, such as items sold by a retailer, if they are sold at the normal selling price. If the purchase price were, for example, ten times the normal standard, then the purchase could be considered a stake. In such a case, the winner would no longer be decided by chance, so that it would not be gambling.

Are you solving a similar problem?

Dostupný advokát team of online lawyers will solve it for you.

Solutions Tailored for You

Our team of experienced attorneys will help you solve any legal issue. Within 24 hours we’ll evaluate your situation and suggest a step-by-step solution, including all costs. The price for this proposal is only CZK 690, and this is refunded to you when you order service from us.

Preset Prices
When you order, you know what you will get and how much it will cost.
Online and in person
We handle everything online or in person at one of our 4 offices.
We Work Fast
We handle 8 out of 10 requests within 2 working days.
Experienced Team
We have specialists for every field of law.

Has this content helped you? Give it a rating

No rating yet. Be first to rate and help others.

Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

Reviews of the Dostupný advokát service

Recenze služby

Tomáš Hrdlička, Nové Strašecí

I felt very uncomfortable meeting an attorney in person. But Dostupný advokát managed to solve everything for me online. I bought a consultation because my employer had sent me for a long term business trip to an exotic country with no explanation, and I wanted to be sure what my rights in this situation were. The Skype consultation was very pleasant and the service was fast. I can fully recommend them.

Recenze služby
Fitness Center Manager

Zuzana Marková, Prague

We had terms and conditions drafted for our gym, and now we are very glad that we did so. Clear relationship rules are the basis for lasting friendships, and never more so than in the business world!

Recenze služby

Ms Magic, Google reviews

Fast and professional solutions for most normal legal needs at affordable, preset prices. Seriously, what could be better than that? While it sounds ‘too good to be true,’ I’m happy to report that the staff at DA are pros, and what’s more they are honestly dedicated to their awesome mission, which is to make quality Fast and professional solutions for most normal legal needs at affordable, preset prices. Seriously, what could be better than that? While it sounds ‘too good to be true,’ I’m happy to report that the staff at DA are pros, and what’s more they are honestly dedicated to their awesome mission, which is to make quality legal services affordable for the average person. I find their prices very fair when compared to what I’ve usually paid for similar services, which means I (and my family and friends) can get the legal help I need without worrying about some black hole of never-ending fees. In my own experience with DA I’ve found everyone there very responsive, and emails and calls are answered in a timely manner. Their large staff also gives me confidence that any legal needs I have can be handled professionally, as there’s always someone with experience in my particular issue. Their head attorney also writes a regular blog and keeps up with all the latest legal trends, which means they as a business stay up-to-date. As someone who’s spent a fortune over the years on legal assistance, or tried to “go it alone” when I couldn’t afford legal help, I wish Dostupny Advokat had been around a long time ago. I highly encourage anyone who needs legal help to TRY THEM FIRST!

View All Testimonials

You could also be interested in

We can also solve your legal problem

In person and online. Just choose the appropriate service or opt for an independent consultation when you are unsure.

Google reviews
4.9
Facebook reviews
5.0
5 200+ people follow our Facebook
140+ people follow our X account (Twitter)
140+ people follow our LinkedIn
 
We can discuss your problem online and in person

You can find us in 4 regional towns

Quick contacts

+420 775 420 436
(Mo–Fri: 8–18)
We regularly comment on events and news for the media