Marketing

01 Oct 2008

I'm considering running a sales promotion where a lucky customer will win $100,000. Eligible customers will be placed in an initial draw and the winner of that draw will be placed in a second draw. The second draw requires the winner of the first draw choosing from 100 envelopes one of which contains $100,000. Could this breach the Fair Trading Act?

Yes. An advertising campaign must not be misleading and must correctly state prizes on offer. Failure to do so runs foul of the Fair Trading Act (FTA) and penalties for breach of the FTA can include fines of up to $200,000 for a company and $60,000 for an individual.

An advertiser was recently fined $80,000 plus costs for a similar promotion. The television advertisement was held to be misleading under the FTA because it implied that the winner would receive $1m and a holiday home, when they were actually going into a second draw to win those prizes. This was despite the advertiser providing the true terms of the offer in fine print at the end of the commercial. The fine print was not sufficient to correct the misleading impression that had been created. 

The key lesson to remember is that the overall impression created by a promotion is critical. That overall impression cannot be substantially changed by fine print.

Author

Peter Stubbs

Partner - Corporate & Commercial

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