Legal update on prize promotions, competitions and incentives

promoOne of the most engaging and powerful aspects of B2C and B2B customer marketing and communications is prize promotions, competitions, promotions and incentives.

And they are also some of the most difficult things to get right, requiring an understanding of a complex web of competition, data protection, and media laws and regulations as discussed in Essential Law for Marketers.

However, given the appetite of regulators to want to tighten data protection across a number of areas including sales and marketing practices, the use of prize promotions, competitions, promotions and incentives as a way of lead generation is the latest to fall victim of new controls.

As reported previously in Brand Republic, marketers must be ultra-careful when using any form of incentive as a condition to encourage customers to sign-up to receive information about products and services, which spooked quite a few marketers who wanted clarification on this point.

The Information Commissioner’s Office (ICO) Guidance note on this point is extremely relevant and it’s clear that brands can’t rely on implied consent from the customer as a way round of assuming actual consent.

The ICO Guidance clearly states:

“…. However, organisations cannot rely on “implied consent” as a euphemism for ignoring the need for consent, or assuming everyone consents unless they complain. Even implied consent must still be freely given, specific and informed, and must still involve a positive action indicating agreement (e.g. clicking on a button, or subscribing to a service). The person must have understood that they were consenting, and exactly what they were consenting to, and must have had a genuine choice – consent cannot be a condition of subscribing to a service.”

In practice, this means the brand owner can no longer state that “by entering this competition or prize draw you are agreeing to receive marketing messages from us”. They must also offer a chance to object at the same time.

In many respects, this defeats the object of the exercise of using prize promotions, competitions and incentives for developing a list for many marketers that want to keep a channel of communication open with customer segments and gain prospects in this way.

“We now have the situation where marketers really need to think long and hard about the investment made in these activities. An individual can of course participate in a prize promotion or competition and give their personal details but the brand owner can now only process this information to let them know if they’ve won and not for any further marketing unless consent for this purpose is also gathered at the same time.

“Using implied consent just won’t cut it,” explains Jenny Moseley, a leading direct marketing and law expert.

On top of this is the principle of proportionality even where it can be said that some form of incentive has been used to trigger informed consent from a customer or participant to continue to receive marketing messages in the future.

The ICO guidance is clear on this point too.

“The key points are that for consent to be valid it must be:

  1. freely given – the individual must have a genuine choice over whether or not to consent to marketing. Organisations should not coerce or unduly incentivise people to consent, or penalise anyone who refuses. Consent cannot be a condition of subscribing to a service or completion of a transaction.
  2. specific – in the context of direct marketing, consent must be specific to the type of marketing communication in question (e.g. automated call or text message).”

 

In practice, a judgment call will be required by the marketer as to what in the circumstances will be deemed to be proportionate, explains Moseley.

“Centre Court tickets to the Wimbledon Tennis Men’s Finals may be acceptable but a couple of First Class tickets and an all-expenses 2-week holiday with £1000 spending money to the Caribbean maybe seen as an undue influence in getting individuals to consent to receiving marketing messages in the future,” she says.

The recording of consent also appears to have become a big issue as an individual will need to be given a range of opportunities to give consent for marketing by post, phone, email and SMS and if these are all collected at the same time, then there needs to be an accompanying opportunity to select or reject consent via a selection of tick boxes.

Ardi Kolah is author of Essential Law for Marketers, published by Kogan Page. Order your copy today and get a 30% discount by clicking here

  • N CHRISTIE

    Disappointed to hear that this is the last post. Have enjoyed reading your perspective on the industry.

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