Online Competitions & the Law

A good marketing technique when wanting to boost traffic to your website is to have a competition. A competition or contest always involves a prize whether monetary or otherwise. If you are thinking about your company having a competition, there are many legal implications that are involved depending on the prize, your industry, your jurisdiction, and the jurisdiction the players of the competition will be based in. These legal implications should be clearly stated within the terms and conditions of the said competition.

First things first, it is important on the first page to state implicitly that you do not have to purchase anything or donate money in order to win the contest. Of course, if you have to buy an online lottery ticket, there will be money involved, but it does not mean that it will increase your chances of winning.The competition terms should also say that the competition is void where prohibited or restricted by law.

Let’s now take a look at the content of the terms and conditions.

Of course it is important to describe the competition, its aim, its purpose, and inform the players of how to register to play the game, enter the competition, and play. The eligibility should also be discussed. Who is this game targeted for? Age and jurisdiction are key factors. There are strict legal implications with cover the age of players in some jurisdictions. Necessary checks should be put in place to make sure that all players fall within the valid age range.

With regards to the prize, the terms must include how the winner will be determined, the actual prize (e.g. a holiday for two or $5,000), and how to claim the prize if you are a winner.

As mentioned above, each jurisdiction will have different restrictions so it is important that these restrictions are mentioned. If they are not followed the player will be disqualified.

The conditions of disqualification should be stated in the agreement. It should include; failure to comply with rules, supply of untruthful, intentionally inaccurate, or misleading personal details or information, or details of information pertaining to referrals; failure to provide proof of identity; use of technology to gain an unfair advantage over any other player; unlawful conduct etc.

As well as fixed clauses specific to the competition, other typical clauses such as; termination provisions, conflicts and dispute resolution, privacy, and communications, should be included.

What is important is that the liability is removed from the Competition owners. There must be a clause specifying that the player will indemnify and hold harmless from any and all liability resulting from or arising from the competition, the owners of the competition. The clause should also release all rights the players have to bring about any claim, action, or proceeding against the owners of the competition. This clause is general and related to the release of claims. If your competition is worldwide, or out of your jurisdiction it is important to have a ‘release of claims’ clause for any jurisdiction that is not covered by the above general statement.

This is just a brief description of what the terms and conditions of a competition would consist of. In general there would be waivers, indemnification and authorization for the usage of the players’ personal information. Jurisdiction is a large factor and some countries do not allow for competitions at all. Tax on the competition prize in certain locations should also be considered.

All these factors and more can be discussed with you in more detail by your legal counsel.