How to run consumer competitions in 2017?

Do you run consumer or marketing competitions? How is legal regulation changing in 2017? What will be newly easier? What can you newly forgive? Does this also apply to online marketing games?

4 minutes of reading

People are playful. Marketing experts often take advantage of this, recommending games or sweepstakes to strengthen the brand or attract potential customers.

The State, on the other hand, has an interest in protecting consumers from the risks of gambling and has long considered some marketing competitions to be such risks. Before we look at what the rules are for running these “games” from the new year onwards, let us recall how it has been until now.

The old rules

The old lottery law defined several features of a consumer competition:

– A contest, poll, or other prize event;

– a prize draw or other random selection;

– a condition of participation, which may be the purchase of a particular product or service or participation in a promotion or advertisement by the provider and/or operator;

– prizes, which may be money (or securities, cheques, etc.), real estate or other prizes in kind.

According to these features and the degree to which they are fulfilled, three types of competitions were distinguished.

Consumer lotteries, which are always prohibited, were not allowed. They fulfilled all the characteristics. In particular, the prize is purely random and the value of the individual prize exceeds CZK 20 000 (strictly speaking: if there are prizes in kind in the competition, the aggregate of all non-monetary prizes for all games operated by the operator in monetary terms exceeds CZK 200 000 in one calendar year and the value of the individual prize exceeds CZK 20 000).

It was not possible to organise such a competition for marketing reasons; it was de facto a classical lottery for which a special licence was required.

Another type was consumer competitions subject to registration with the Tax Office. These could also fulfil all the above-mentioned characteristics, but the prize was limited to CZK 20 000 or CZK 200 000. It was only necessary to register them.

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However, if a competition did not fulfil at least one of the above characteristics, it was not subject to any restriction. In most cases, the lawyers focused on the concept of randomness. Randomness is not a prize in guessing or knowledge contests or games otherwise dependent on the skill of the participant. It was even sometimes recognized that whoever called, for example, fifth after the contest was announced could be rewarded because even that was “guessable” and not purely random.

This is also the source of TV polls like ” Who founded Charles University in Prague? A) Přemysl Otakar II. b) Charles IV. Even such a question is recognized as a knowledge question, even if it is sometimes a bit of an end-run around the law.

If the competition had more than one phase, the element of chance must not have been present in any of them. It was thus forbidden, for example, to draw lots for those who answered the question correctly.

So what does the new legislation bring?

The legislator has apparently decided that concealing the element of chance is already embarrassing. The rules for running consumer competitions are therefore being “brutally” loosened. A consumer competition is not really a game of chance, but rather a marketing tool. Consumer competitions are therefore not regulated at all in the new Gambling Act, which replaces the Lotteries Act.

– It is therefore no longer necessary to limit the amount of the prize to CZK 20 000 or CZK 200 000.

– There is no need to register the competition with the Tax Office.

– There is no need to eliminate or circumvent the random element.

However, it remains a condition that such a competition is not subject to any deposit. Then it would already be a game of chance. However, neither the purchase of goods nor participation in a marketing event is considered to be such a stake.

Nevertheless, the new marketing competition is not completely left “unattended”. It will now be considered a commercial practice regulated by the Consumer Protection Act.

Such a practice must not be unfair or deceptive.

A commercial practice is 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.

It would then be a deceptive commercial practice if, for example, promised prizes are not paid or delivered or the rules of the competition are not complied with. We recommend that you do not underestimate these and that all terms and conditions are carefully regulated in advance (including the handling of personal data). Sometimes the game is attacked by various hoaxers or it is necessary to change the prizes at the last minute, etc.

For deception or unfair treatment of the consumer, you can be fined up to CZK 5,000,000 by the Czech Trade Inspection Authority.

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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

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