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Online competitions – the tricks and traps

Too good to be true? Don't be fooled by alluring prizes.

throwing dice
Rebecca Douglas
Rebecca Douglas
Last updated: 12 September 2018
Fact-checked

Fact-checked

Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Online competitions that offer the chance to win a holiday to Fiji, an iPad or a $1000 shopping spree sure sound enticing. And more and more of these contests can be found online, appearing regularly in our social media feeds. 

But how many of these promotions are actually genuine and what hidden dangers lurk among the luxurious prizes?

Laws and legalities

Trade promotions, or business-run competitions, are either "games of chance" where the winning entries are drawn at random, or "games of skill" where entries are judged based on merit (such as answering a question in "25 words or less" or submitting the funniest photo). All trade promotions must comply with consumer protection and privacy laws, while games of chance must also comply with state-based trade promotion laws.

Games of skill are popular because businesses don't need a permit to run them. For games of chance, the permit requirements vary from state to state and with the value of the prize on offer.

Checking for an Australian permit number is a good way to make sure the promotion is above board

When entering a competition based on the luck of the draw, checking for an Australian permit number is a good way to make sure the promotion is above board.

When you're considering entering either a game of chance or a game of skill, it's important to check that the contest has terms and conditions to confirm it's being professionally run, that you meet the criteria for entry, and how your information will be used.

What to look for

Sharon Givoni is a lawyer specialising in the legalities of trade competitions. She says terms and conditions should spell out the responsibilities of the contest holder as well as the winners and the runners up, the steps to be taken to enter the competition, and how your personal information can be used. 

"Personal information can be obtained, used, and sent out to third parties where that information would be beneficial for the purposes of advertising and marketing," she says.

Personal information can be obtained, used, and sent out to third parties

Sharon Givoni, lawyer

Givoni recommends reading the terms and conditions carefully to make sure you're happy with the deal before handing over your information.

"Read the full terms and conditions, know what the prizes are, look for a permit number and make sure you know how your entry will be used. Opt out of them sending email to you, if possible," she says.

Privacy issues

Businesses running promotions must comply with privacy laws surrounding the collecting of your personal information and sharing it with third parties.

"Personal information could be obtained, used, and sent out to third parties, where your information would be beneficial for the purposes of advertisement and marketing," says Givoni.

Your personal details could end up on databases, leading to all sorts of unrelated companies contacting you for promotional purposes. Competition entrants can protect themselves by being smart about knowing who they're dealing with and how that information can be used.

"If you don't know the listed promoter in the terms then be careful what data you share. There are many promotions companies which on-sell data legally, consumers just need to be aware they are participating or choose not to," Quirk says. 

"Never hand over passwords, bank details or other important information as part of a competition."

Opt out of receiving future market material wherever possible, so you don't receive unwanted emails from the brand and potentially third parties. The Office of the Australian Information Commissioner provides further information about the privacy rights and obligations of individuals and organisations.

Ultimately, reading what you're signing up to and managing your personal information carefully is a winning combination.

How competitions have changed

Suki Harrison is the founder of OrigamiGlobe, an organisation that helps businesses plan and manage promotions and giveaways. She says in the past 10 years, SMS competitions have taken a backseat. 

More and more businesses are taking their promotions online, as online competitions have become cheaper and easier to run with the rise of platforms like Instagram and Facebook. 

This means consumers no longer need to worry about premium text message costs to enter and other hassles that an SMS competition entry brings.

"We've found customers have also drifted away from SMS competitions because they find the spam text messages they receive afterwards annoying, whereas to a certain extent we've learnt to accept spam emails as part of online life," says Harrison. 

Customers have also drifted away from SMS competitions because they find the spam text messages they receive afterwards annoying

Suki Harrison, OrigamiGlobe

"Businesses have moved towards web and social media competitions as it has become easier and cheaper for them to run these kinds of promotions."

"Everyone's setting up their business on Facebook, and everyone's coming up with these new and ingenious ways to market their business. Competitions online and on Facebook and Instagram can be really low cost, and really easy to manage as well," Harrison says.

The whole process is now faster for both consumers and businesses. Rather than writing your entry on the back of a postcard and mailing it in, then waiting months for the promoter to sift through the entries to pick out a winner, these days you can enter with the click of a button. 

This means competitions are more prevalent overall, and a greater number of people are entering, making it harder to win promotions run by big companies. You're likely to have more luck with competitions from smaller businesses.

You're likely to have more luck with competitions from smaller businesses

"If you go for the smaller, more niche competitions, say you're following your favourite small business on Instagram and they only got a few hundred or a thousand followers, it's going to be a lot easier to win that prize because there's going to be a smaller number of entries," says Harrison.

Brands both big and small run competitions to generate immediate sales and to build an email list of their ideal customers so they can market to them in the future.

"I had a client recently in sporting goods who ran a competition which cost them about $6000 and as a direct result of the competition, they generated about $75,000 worth of sales," Harrison says. 

Links and likes on social media

Harrison says that along with "enter your email to win" web pages, the most popular kinds of competitions would be simple ones encouraging consumers to like pages and like posts on social media. 

Businesses also like to explore new and exciting competition types, but need to make sure these creative, fun ideas don't make it too hard for people to enter.

An increasingly popular form of entry is "user-generated content". This involves inviting entrants to send in a photo or video, which is then used by the business in its social media posts. 

The contests are fun and have a low barrier to entry, as most people have a smartphone. They also tap into people's desire to share media of themselves online. 

However, these kinds of promotions are not without their pitfalls.

Who owns your entry?

Megan Clewer enjoys entering competitions and has won plenty of prizes, but had one unpleasant experience when entering the competition of an Australian gravy manufacturer. 

She submitted a photo of herself covered in the condiment. Despite not winning the contest, the company used her photo in a Facebook advertisement and as a result she was harassed online. 

She messaged the company and asked them to take it down. They refused, until she mentioned the possibility of taking legal action.

The Australian Copyright Council urges competition entrants to check the terms and conditions to see how any material they've created such as a photo or video can be used and whether they are signing away their rights. If you're not comfortable with how your material can be used by the organisation, the Council recommends not entering.

Possibility of cheating

Other competition woes spring from fellow entrants rather than those running the contest. The way online forms and other mechanics are designed and programmed can leave them vulnerable to cheating, meaning honest entrants might lose out.

Dean Koorey encountered this scenario when he entered a SEEK job search website contest to invent a job you wish existed. His suggestion of a tooth fairy ombudsman secured him a spot among four other finalists, where the most popular would win. Three of the other contestants appeared to find a way to rig the online voting system and were disqualified. Happily, the two genuine entrants were then left to battle it out for the prize and Dean emerged victorious, walking away $20,000 richer.

Adam Quirk is the managing director of Traction Digital, a firm that designs and builds online competitions. He says a variety of mechanisms can be built in to help prevent cheats from prospering, such as entry validations (like requiring an entry code or barcode), CAPTCHA to minimise robotic repeat entries, imposing entry limits for the same IP address or email, and a human at the end checking winners have complied with the terms and conditions of entry.

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