For many hundreds of years raffles, lotteries, prize draws and other competitions have provided an entertaining means for encouraging brand loyalty and generating revenue. Competitions remain a popular method of marketing today and the modern focus on social media engagement has made it increasingly common for them to be conducted through those channels.
Competitions on social media sit at the intersection of several different legal disciplines, including contract, data protection, gambling regulation, consumer protection and competition law. Consequently, brand owners running competitions on social media must try to navigate successfully a complex web of legislation, industry codes and good practices.
Unilateral contracts
Most competitions will create a contract, whether or not that was the intention of the brand owner. Offering a prize to people that enter a competition may constitute what lawyers call a “unilateral contract.” A legally binding contract is formed between the brand owner and each person taking the actions necessary to enter the competition.
An unwritten or badly-drafted contract is, naturally, a recipe for confusion and argument. For that reason, the terms and conditions of the unilateral contract governing the conduct of the competition should be made very clear before anyone can enter.
The Advertising Standards Agency (the “ASA”) also require that promotional marketing communications set out “all applicable significant conditions or information where the omission of such conditions or information is likely to mislead” and are “clear and upfront”. The ASA say that they expect competition terms and conditions to include, as a minimum:
- how to participate;
- any free entry route explanation;
- start date (if applicable);
- closing date;
- any proof of purchase requirements;
- the nature and number of any prizes or gifts, or a reasonable estimate if the number cannot be determined;
- any restrictions or limitations, such as age, date or geographical restrictions;
- any limitations of availability;
- unless obvious, the promoter’s name and address.
Data Protection
UK data protection law also requires that certain information be provided to the individuals whose personal data will be processed for the purpose of running the competition. The information requirement comes from the UK GDPR and includes items such as:
- the identity and the contact details of the controller;
- the purposes and legal basis for the processing of personal data;
- the recipients of the personal data;
- where applicable, the fact that the controller intends to transfer personal data overseas and the legal grounds for doing so;
- the period for which the personal data will be stored.
The information could be presented to individuals as a standalone Privacy Notice or be incorporated into the contract terms referred to above.
Gambling
The Gambling Act establishes the rules for promotion and advertising of lotteries. Running a lottery for commercial gain on social media without a local authority registration or a Gambling Commission licence is a criminal offence.
Free draws are not regulated but there are certain rules that need to be observed for these. For example, free entry will include the use of first or second class post, but not special delivery. If a draw has both a paid and a free entry route then the system that determines prizes must not treat the two routes differently.
Consumer protection and competition
The Digital Markets, Competition and Consumers Act 2024, that came into force in April 2025, grants the Competition and Markets Authority tougher powers for protecting consumers.
The most serious breaches can attract a fine of the greater of £300,000 or 10% of annual global turnover. Even the most minor breaches can attract a fine of the greater of £30,000 or 1% of annual global turnover.
There is a long list of banned and potentially unfair practices under the Act. Some of these can apply to social media posts, including:
- using editorial content to promote a product where the promotion has been paid for, without making that clear;
- falsely claiming or creating the false impression that the trader is not acting for purposes relating to the trader’s business or falsely representing oneself as a consumer;
- creating the false impression that the consumer has won a prize when in fact claiming the prize requires the consumer to pay money or incur a cost.
Advice
Before launching a competition on a social media platform, write clear terms and conditions that will minimise the risk of a misunderstanding with the entrants and meet the requirements of the ASA and data protection legislation. Ensure that these terms and conditions are presented to entrants before they enter the competition (possibly as a click-through notice).
A member of our commercial team can help with that drafting whilst also advising on compliance with the other regulatory matters mentioned above.
If you would like more information about how we can help, please call 020 7421 9421 or email us at sols@gordonsols.co.uk and ask for our commercial team.
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