With the end of the year drawing closer and bringing along an increasing number of promotional campaigns and contests organised by the economic operators for their clients, we would like to plainly and simply reiterate “rules of the game”.
Authors: Raluca Pușcaș (partner), Irina Oprea (associate), Filip & Company Business Law
- Promotional campaign vs. contest
As defined by the law, a promotional campaign or promotional sale is the retail/cash and carry sale/provision of market services that may take place at any time of the year, if the following conditions are met:
a. the sale must take place at a discounted price, but not at a loss;
b. promotional campaign must concern available products or products the stock of which can be renewed as well as services commonly sold or provided, as applicable;
c. a trader who wants to promote a category of products over a certain period of time, must either renew its stock in order to meet the consumers’ demands and needs throughout the announced period of the campaign or inform the consumers that the offer is valid only within the available stock limit.
However, the contest or “the store drawing” as defined by law, is that practice of promoting products/services that tends to stimulate the participants’ hope of winning by drawing lots and which is permitted only if no direct or indirect costs are imposed on the participants in return, in addition to the purchase of the product/service.
- Rules of the game
a. The promotional campaign
In addition to all the conditions mentioned above, the economic operator must ensure, throughout the campaign, that it provides the consumers with correct, complete and accurate information, so that the decision they take in relation to the products covered by the campaign best suits their needs. The essential characteristics of products, as set out by law by way of example, include the following: availability, advantages, risks, manufacture, composition, accessories, manufacturing process and date, etc. Moreover, if the campaign involves discounted prices, such discount must be determined by reference to the reference price charged in the same sale outlet for identical products or services. The reference price is the lowest price charged at the same sale outlet during the last 30 days, before the date of application of the discounted price.
Remember!! The sale of products that have been included in expired/ended promotional campaigns (e.g., to continue to sell products under the logo of a promotional campaign, although the campaign has ended and the sale price is the usual price and not the discounted price used during the campaign) is deemed to be an unfair commercial practice, since consumers are misled and determined to purchase a particular product without a real advantage. In this regard, over the years, ANPC (Romanian Consumer Protection Authority) has imposed a large number of fines and measures to stop these unfair commercial practices.
Such situations could be avoided by providing customers with a set of updated information indicating that the offers/promotional campaigns of those products have ceased, so that the customer is not led to believe that, as a result of purchasing that product, he/she will continue to benefit from a certain advantage (the chance to win, as such had been presented in the ended campaign).
b. The contest
In order to organise a contest, the economic operators must first draw up the rules for participating in/running the contest. In order to ensure that consumers are provided with correct and complete information, the rules should indicate the following:
- the name and address of the contest organiser;
- the period of the contest;
- the participation and eligibility conditions (the category of persons to whom the contest is addressed and the possible restrictions regarding the participation of relatives/affiliates of the persons involved in the organisation of the contest);
- the mechanism of the contest (the actual presentation of the contest);
- a description of the prizes awarded, indicating specifically their nature, number, and commercial value;
- the means of designating the winners;
- details about the award of prizes (e.g., in case of gift vouchers, it should be specifically indicated how the voucher is to be delivered, its validity period, the conditions of use of the prize won);
- details on how the personal data of the participants/winners are processed;
- details on the prizes and taxes related to the prizes;
- an express mention stating that the organiser has the obligation to make public the winners’ names and the prizes awarded.
The rules must also state that “the rules for participating in/running the contest are available free of charge to anyone requesting them” and one should indicate the address or telephone number of the contest organiser, to which the request may be submitted.
Another important aspect that the contest organisers need to consider is the authentication of the rules by a notary public, before the start of the contest. Any change that occurs after the start of the contest must be set out in an addendum to the rules, to be authenticated by a notary public before the implementation of that change. Any changes to the contest must be disclosed to the public in the same manner used for communicating the rules. Such situations should be carefully considered on a case-by-case basis in order to avoid the use of unfair practices towards the participants who have already signed up.
In what concerns the processing of personal data in the context of organising a contest, the organisers, generally having the capacity as data controller and establishing the purpose and the data processing means must provide the participants with an information notice in accordance with the requirements of the General Data Protection Regulation (GDPR). The personal data must be collected and processed strictly for contest-related purposes (for organising and carrying out the contest, for designating and validating the winners, for granting the prizes as well as for accomplishing the fiscal and financial-accounting obligations of the organiser). Thus, the data will be processed in order to conduct the contest according to the mechanism described in its regulation (this being the “agreement” between the organiser and the participants who registered in the contest voluntarily) or for the accomplishment of legal obligations incumbent upon the data controller (e.g., tax obligations). The processed data must be kept at a minimum, must be limited to what is necessary to conduct the contest, depending on the type of contest and on the channel where it is carried out. The organisers need to avoid collecting more data than strictly necessary.
In practice, there are cases when contest organisers want their consumers not only to participate in the contest but also to subscribe to various commercial information (marketing communications). In such a case it is important to remember that in order to be able to send commercial communications it is necessary to obtain the express, free, and unvitiated consent of the data subject. The economic operator must provide the potential participant with the possibility of choosing to subscribe to these commercial communications separate from expressing their decision to participate in the contest, by inserting a tick or a mechanism by which the potential participant can make an express (the consent must be recorded and provable at a later time), free (no pre-ticked options) and unvitiated (without conditioning the participation in the contest by the choice made) choice. In order for the consent to be granted in full awareness, the data controller must provide the data subject with full information on the processing of data (in short, such information should include the data controller’s identity and contact details, the legal grounds, the purpose and duration for which the data is stored, the recipients of the data, details regarding automated processing and transfer towards third parties and/or abroad, the rights of the data subject). Moreover, the data controller must provide the potential participant with the option to unsubscribe at a later time from receiving the commercial communications, any time he/she might want to do so and in a manner which is as easy as when he/she first subscribed.
Consequently, the organisation of promotional campaigns and contests entails being consistent with a legislative framework that includes consumer protection and data protection rules, all of which contribute to a successful campaign by creating a safe framework for participants and by preserving the clients’ trust.