Consumer Protection Act Article 8: Responsible, Honest and Fair Dealings Part 4

In our previous article, we discussed marketing in terms of the Act but in regards to specific rights such as over-selling and bait marketing.

In this article, we shall continue on this aspect but in relation to negative option marketing and promotional competitions.  

Negative-option marketing:

This occurs when a supplier of goods or services informs a consumer that an agreement, in this example for a sale, will come into being, or a previously concluded agreement will be amended unless the consumer takes some action, such as informing the supplier that the agreement is terminated or not accepted (please note that this differs from fixed-term agreements that will be discussed in a later article).

If in a sale agreement the supplier will deliver goods to the customer and will inform them that unless the same is returned by the consumer, usually at the consumer’s expense, then the consumer will be liable for the payment of the goods delivered, or in the event of an amendment to the agreement that the consumer must inform the supplier of his/her objection by a specific date failing which the amendment will be affected and the consumer will be bound by those amendments.

Should a sale have been concluded or amended by negative option marketing then the agreement is void and legally unenforceable.

Promotional competitions:

This section of the Act applies to any promotional competitions including games, and arrangements for promotions and does not need to relate to a participant requiring or demonstrating any particular skill before being given a reward, gift, free goods or services, reduction in a price for goods or services or another benefit.

In accordance with the Act, a supplier may not inform a person that they have won a promotional competition if no competition has been held, if the participant has, in fact, not won the competition, or if the reward is generally available without the need of the promotional competition if the reward is made subject to previously unknown conditions that must be complied with before the reward may be claimed or that the participant must purchase something before he/she may claim the reward.

However, the supplier may, in the event that a participant has won a reward, request reasonable postage costs.

The Act further restricts certain parties from participating in the promotion such as employees and agents of the supplier or persons connected with the supplier or the promotion.

However, before the supplier may hold the competition the supplier must prepare competition rules and make those rules available to the commission and participants on request and at the supplier’s cost. Naturally, the supplier must keep a copy of the rules for future reference.

An offer to participate in the competition must clearly identify, with sufficient detail, the benefit (prize, reward etc) and must set out:

  1. What a participant is required to do to take part in the competition;

  2. How the results will be determined;

  3. The closing date for the competition;

  4. How participants will be informed of the results; and

  5. How the reward may be collected or details of delivery.

It should be noted that certain competitions consisting of low-value rewards may be excluded from the operation and requirements of the Act by the relevant Minister.

***Kindly note that the contents of this article are intended for information purposes only and do not constitute legal advice. Consult your attorney.

In our next article, we shall continue to discuss responsible, honest and fair dealings but in relation to specific rights such as trade coupons, loyalty programs and alternative work schemes.