This Act will become relevant when an advertiser wishes to conduct a sale, promotion or competition where customers may enter a draw and have the chance to win a prize, which could constitute a form of 'gambling'.

The Gambling Act 2003 came into force in September this year although only partially, replacing the Gaming and Lotteries Act 1977. The key change under the new Act relates to the classification of gambling into 6 different legal classes based on the risk and stakes involved and the value of prizes offered. For example class 1 represents low stake/low risk gambling that does not require a licence with class 4 representing high risk, high turnover licensed gambling. Casino gambling and gambling conducted by the Lotteries Commission have their own separate classes.

The concept of a 'Sales Promotion Scheme' has survived under the new Act and is a specially authorised form of gambling that does not require a licence, regardless of the value of the prizes offered.

While the definition of a 'Sales Promotion Scheme' has been slightly widened to include any 'gambling' that does not involve a gaming machine or a prohibited prize, (rather than only a prize competition, lottery or instant game), for a sales promotion to be legal under the new Act it must still meet the following criteria:

1. It is used by a creator, distributor or vendor of the goods or services to promote those goods or services; and

2. Participation in the gambling requires a person to purchase the goods or services promoted for a prize which does not exceed the usual retail price; and

3. The date or period on or over which the outcome of the gambling will be determined is clear to the participant at the time and place of sale; and

4. The person is not required to pay direct or indirect consideration other than to purchase the goods or services promoted; and

5. The outcome is determined –

(a) randomly or wholly by chance; or

(b) party by chance (whether chance plays the greater or lesser part) and partly by the application of some knowledge or skill.

With the exception of the fourth point, complying with the criteria is generally not a problem. Under the fourth point, a sales promotion will be illegal if the consumer has to pay more than the usual price or some other additional consideration to enter the promotion, eg postage or dialling a phone number with a cost attached. To avoid such problems, Freepost addresses or 0800 numbers should always be used. 

The Fair Trading Act prohibits certain conduct and practices in trade, provides for the disclosure of consumer information relating to the supply of goods and services and promotes product safety. Some of the key elements of this Act are as follows:

• You must not engage in any conduct that is misleading or deceptive, or is likely to mislead or deceive. For example, you must not use business or product names, to mislead people as to the country of origin of the goods, mislead people as to the age of the goods, misrepresent the length of time you have been in the business, or use misleading packages or labels.
• You must not engage in conduct that is likely to mislead the public as to the nature, manufacturing process, characteristics, suitability for purpose or quantity of goods.
• You must not make false representations in connection with the supply or possible supply of goods. That is claims about a product or service must be factually accurate and capable of substantiation. This includes:

- falsely representing that goods are of a particular kind, standard, or quality, or that they are supplied by any particular person;
- falsely representing that a particular person has agreed to acquire goods;
- falsely representing that goods have any sponsorship, approval, endorsement, performance characteristics, accessories, uses, or benefits;
- making a false or misleading representation with respect to the price of any goods; or
- making a false or misleading representation concerning the need for any goods.

The Codes of Practice are voluntary self regulatory codes developed by the Advertising Standards Authority to cover a wide range of advertising. Their purpose is to complement (not replace) the current law. There are general codes of practice for advertising such as the Code of Ethics as well as specific codes of practice relating to advertising to children, the sale of alcohol, tobacco and financial services. Accordingly, when advertising you should consider the general principles of these Codes of Practice and ensure that:

• All of your advertisements must comply with the laws of New Zealand.
• No advertisement should damage public confidence in advertising.
• Your advertisements should not be misleading or deceptive or likely to mislead or deceive the consumer.
• All of your advertisements should be prepared with a due sense of social responsibility to consumers and to society.
• All of your advertisements should respect the principles of free and fair competition generally accepted in business.

Please note specific legal advice should be sought regarding Advertising Codes of Practice.

The Broadcasting Standards Authority deals with breaches of the Broadcasting Act. The Broadcasting Act contains broadcasting standards which radio and television stations are required to comply with, including:

• All of the statements made in broadcasts must be truthful and accurate on points of fact.
• All broadcasts must be within the norms of decency.
• Broadcasts must comply with the laws of New Zealand.
• You must avoid portraying people in a way which represents them in an inherently inferior context or is likely to encourage discrimination against any section of the community.