Browse topics

  • Governing law
    NameLaw or Code?
    The UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing ('CAP Code') (12th edition) Code
    The UK Code of Broadcast Advertising ('BCAP Code') Code
    Consumer Protection from Unfair Trading Regulations 2008 as amended by the Consumer Protection (Amendment) Regulations 2014.('CPRs') (or the Business Protection from Misleading Marketing Regulations 2008 for B2B promotions) Law
    Gambling Act 2005 Law
    PhonepayPlus Code of Practice (relevant where a premium rate telephone number is used as the method of entry for example) Code
    Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 Law
    The Data Protection Act 1998 Law
    Note: Prize promotions on broadcast media (TV and radio) are subject to significantly fewer rules (under the BCAP Code) than on non-broadcast media (under the CAP Code). This booklet reflects the more detailed requirements relating to non-broadcast media; a careful approach would be to seek compliance with these for broadcast ads as well.

    Last modified 10 Feb 2017

  • Extra-territoriality

    The CAP Code does not apply in relation to prize promotions which are published in foreign media (eg. in a US newspaper).

    If the promotion targets UK consumers, but is promoted from a non-UK website or in direct marketing from outside the UK, then:

    • If the promoter is based in a country which operates a cross-border complaint system that the ASA considers suitable, the ASA will leave it to the relevant authority in that other country. The ASA is a member of the European Advertising Standards Alliance and considers most EU countries to operate suitable systems.

    • If the promoter is not based in such a country, the ASA will do what it can to take action, but in reality such action is likely to be limited and the ASA is unlikely to prioritize such cases.

    The BCAP Code only applies to promotions on TV services licensed by UK media regulator Ofcom.

    Last modified 10 Feb 2017

  • Skills competitions

    Yes, but ensure:

    • The winner is determined on the basis of skill not chance, particularly if the entrant pays to enter.

      The skill element requires entrants to exercise skill or judgement or to display knowledge as part of requirements which either prevent a significant proportion of potential entrants from taking part or prevent a significant proportion of entrants from receiving a prize. (If this level of skill is not met, it could be categorized as a promotion judged on the basis of chance and as such if payment is required, this would be a lottery, giving rise to criminal liability if the appropriate license is not obtained).
      Note: Asking one question the answer to which is widely known is unlikely to qualify as sufficient exercise of 'skill, knowledge or judgment'.
      and

    • Terms are notified to entrant before purchase is made.

    If a multiple choice format is used:

    • There must be significant plausible alternatives to the correct answer, and

    • The correct answer must not be obviously given close to the question
    Note: Be ready to provide evidence of work undertaken to ensure sufficient level of skill is required.

    Last modified 10 Feb 2017

  • Prize draws

    Unlawful (potentially deemed an illegal lottery in the absence of a license), unless participants do not pay to enter or to claim/ receive prize.

    'Payment' includes: where the only route of entry is a premium rate phone line; paying more than usual rates for delivery of the prize; paying to discover whether a prize has been won or to collect a prize; and paying for goods and services at an inflated rate which reflects the opportunity to take part in the promotion. As a general rule, the provision of data does not amount to payment, but a requirement to provide a large quantity of data could amount to payment, especially if the promoter intended to sell such data to third parties.

    Note: In Northern Ireland (which is part of GB but not the UK), a genuine, no-purchase route to entry must be provided. This is not a requirement in the UK, but it can be a good way to avoid the risk of there being a payment.

    Last modified 10 Feb 2017

  • Selection of winners

    Promoters must ensure promotions are conducted under proper supervision, make adequate resources available to administer them and allow enough time for each stage eg judging rounds.

    Prize draws must be selected by a computer process producing verifiably random results, or by (or under supervision of) an independent person.

    Prize winners should receive their prizes normally within 30 days of the closing date. It is no longer a requirement, but advisable, if possible, to let winners know when they can expect their prize if not within 30 days.

    Winners should be informed individually and a list of winners should be available on request.

    Last modified 10 Feb 2017

  • Judges

    Skill competitions where the selection of winning entries is open to subjective interpretation must be judged by a demonstrably independent judge or a panel with at least one independent member. Those judging must be competent.

    The criteria and mechanism for judging entries must be made known before, or at time of, entry.

    Last modified 10 Feb 2017

  • Prizes

    Prizes awarded must be as described in their marketing communications, or reasonably equivalent to that description.

    Participants in instant-win promotions must get their winnings at once or must know immediately what they have won and how to claim without delay, unreasonable costs or administrative barriers.

    Last modified 10 Feb 2017

  • Registration requirements and fees

    Registration Requirements

    There are no requirements to register prize promotions.

    Fees/Taxes payable

    The tax consequences must always be considered, in particular VAT and income tax/corporation tax and specialist advice should be sought. All will depend on the facts. Tripartite arrangements tend to be particularly complicated.

    Generally, if publicity, advertising or some other form of consideration is received in return for incurring the cost of the prize, the promoter may deduct the cost of the prize for corporation tax purposes but must account for VAT on the supply of the prize and the promoter may claim input VAT on the cost of the prize.

    If the prize is a true gift, the promoter only needs to account for VAT where the value of that prize exceeds £50 under the business gift rules but then will be entitled to claim input VAT on the cost of the prize. The promoter will not generally be able to claim a deduction for the cost of the prize for corporation tax purposes unless the promotion is open to the general public and the prize is one of the promoter's products.

    Last modified 10 Feb 2017

  • Other local requirements

    Promoters must conduct prize promotions fairly and efficiently, and must 'avoid causing unnecessary disappointment' eg by changing the terms (to be avoided if at all possible) or stopping the promotion.

    Significant conditions, or information which, if omitted, is likely to mislead, must be communicated before purchase, or, if no purchase is necessary, before entry into the promotion. Examples of significant conditions include: restrictions on entry (eg age, geographical), how to participate, costs of participating, start and close dates, proof of purchase requirements, details of prizes, IP assignment, any post-event publicity requirement.

    Note: Where there are space limitations eg twitter/ banner ads, you must communicate as much information as possible and direct the entrant to where all significant terms are stated.

    A promoter's name and address must be stated unless it is obvious from the context.

    The CPRs (which carry potential criminal liability for breach) specifically prohibit claiming to offer a prize without awarding it, and creating a false impression that a consumer has won a prize.

    Last modified 10 Feb 2017

  • Timing

    No, although time should be allowed to deal with data protection issues (eg ensuring an appropriate privacy policy is in place and including appropriate tick box functionality for consents).

    Last modified 10 Feb 2017

  • Translations

    None required.

    Last modified 10 Feb 2017

  • Penalties for non-compliance

    The ASA has limited sanctions, the main one being publicizing adjudications that a company breached the CAP/ BCAP code.

    The majority of offenses arising under the CPR's are punishable by a fine, which used to be set at a maximum of £5,000. However, this statutory maximum has now been disapplied so there is flexibility to impose a higher fine. For more serious cases, an (unlimited) fine or a prison term of up to 2 years or both can be imposed. For example, a fine was levied on a retailer of £300,000 for misleading advertising in breach of the CPRs. Sanctions are proportionate to the breach and routinely commence with requests to amend or stop non-compliant promotions. Immediate compliance often prevents more severe sanctions. In addition, the amendments made to the CPRs in 2014 provided consumers with a direct right to redress (in addition to actions that can be brought by the regulators), and this includes possible remedies such as damages.

    For breach of data protection rules, the Regulator (ICO) may serve an enforcement notice requiring rectification. Failure to comply is a criminal offense punishable by fine of up to £5,000. The ICO can impose fines of up to £500,000 for serious breaches likely to cause substantial damage or distress and contravention was deliberate or the data controller knew or ought to have known there was a risk of breach. However, such fines are rare.

    Last modified 10 Feb 2017

  • Restrictiveness of regulations

    The CAP rules set out quite detailed requirements, but are based on common sense and are not unduly onerous (there are no registration or other formality requirements, and most prize promotion mechanics are allowed so long as it is not a lottery). Compliance with the CAP rules will generally result in compliance with the (less detailed) CPRs. The steps necessary to avoid falling into the category of 'lottery' under the Gambling Act 2005 are (while important) not very restrictive.

    Last modified 10 Feb 2017

  • Regularity of sanctions

    Fines and prison sentences are rarely imposed.

    It only takes one complaint for the ASA to investigate a promotion, and adverse ASA adjudications are very common (5-15 a week). But while an adverse ASA adjudication can cause bad publicity, it does not carry a monetary sanction.

    Last modified 10 Feb 2017

  • Key contacts
    John Wilks
    John Wilks
    Partner DLA Piper UK LLP [email protected] T +44 20 7796 6288 View bio
    Claire Sng
    Claire Sng
    Senior Associate DLA Piper UK LLP [email protected] T +44 20 7796 6348

Governing law

What are the applicable governing laws or codes for prize promotions?

United Kingdom

United Kingdom

NameLaw or Code?
The UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing ('CAP Code') (12th edition) Code
The UK Code of Broadcast Advertising ('BCAP Code') Code
Consumer Protection from Unfair Trading Regulations 2008 as amended by the Consumer Protection (Amendment) Regulations 2014.('CPRs') (or the Business Protection from Misleading Marketing Regulations 2008 for B2B promotions) Law
Gambling Act 2005 Law
PhonepayPlus Code of Practice (relevant where a premium rate telephone number is used as the method of entry for example) Code
Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 Law
The Data Protection Act 1998 Law
Note: Prize promotions on broadcast media (TV and radio) are subject to significantly fewer rules (under the BCAP Code) than on non-broadcast media (under the CAP Code). This booklet reflects the more detailed requirements relating to non-broadcast media; a careful approach would be to seek compliance with these for broadcast ads as well.