South African promotional competitions - when a prize can truly be free under the CPA, Lotteries Act and PoPIA

Thousands of people enter, and a winner is drawn. The marketing team would love to announce the winner with a photograph and a celebratory post on social media.

However, the winner would rather not. She would also rather not provide the documents the promoter requires before she can redeem her prize. She does not want to do anything other than say, “Thank you" and eat her free lunch in peace (preferably in Paris).

After all, she wonders, wasn’t buying the qualifying product and entering the competition enough?

Unpacking promotional competition law

South African promotional competition law is delicate. It is a layered framework of the Consumer Protection Act, 2008 (CPA), the Lotteries Act, 1997, and the Protection of Personal Information Act, 2013 (PoPIA), complemented by the Advertising Regulatory Board’s Code of Advertising Practice (the ARB Code).

Brands and their agencies navigate this legal landscape regularly and are often familiar with its challenges: a competition mechanic that crosses the line into an unlawful lottery, a verification step that sits awkwardly with a winner’s vested rights, or a publicity clause that fails to withstand legal scrutiny.

What does this legal framework say about requiring the purchase of a qualifying product to enter a promotional competition, verifying the identity of winners, and winners who would prefer not to be photographed?

Is it a lottery or not?

Promotional competitions are expressly included within the definition of “lottery” under the Lotteries Act, 1997. However, the CPA now regulates promotional competitions, having repealed an older section of the Lotteries Act.

The relationship between the two statutes is not entirely straightforward. There is ongoing academic debate about whether a CPA-compliant promotion falls outside the scope of the Lotteries Act altogether, or whether it remains a lottery that is simply rendered lawful through compliance with the CPA.

The absence of consequential amendments to the Lotteries Act has left this question unresolved. In practice, promoters must ensure that their competition mechanics and competition terms comply with section 36 of the CPA.

A question of payment

At the heart of the distinction between a lottery and a promotional competition is the prohibition on consideration. A promoter must not require any payment to participate, gain access to the competition, or for any device needed to enter.

A promoter is treated as having required payment if participants must pay for the chance to win, or if participation requires them to purchase goods or services at a price higher than their ordinary selling price.

Put simply, consumers may pay for the product, but they may not be made to pay for the competition.

In practice, promotional competitions increasingly feature scan-to-win codes, app-based entries, and WhatsApp submissions. These should be tested for compliance during their design phase, as opposed to after campaign launch.

Under the CPA, the right to a prize vests in the winner as soon as the competition results have been determined.

Once that right has vested, it cannot be made conditional on any additional requirements. It cannot depend on the winner making any payment or satisfying any requirement beyond those originally stipulated in the competition rules.

In the Ts and Cs: Verification and restriction

Promoters have legitimate reasons to verify winners, including confirming their eligibility, preventing fraud, excluding the categories of people the CPA disqualifies, and meeting their record-keeping obligations.

Verification that is a necessary administrative step and regulated in the competition terms is permissible but a new condition that qualifies or defeats the vested right isn't. The verification process should not inadvertently trespass into "new condition" territory.

Promoters should also tread carefully when limiting access to prizes. This means that a promoter may not restrict the time or manner in which a prize may be redeemed during a particular period unless it has given participants at least 20 business days’ written notice of that restriction.

In addition, the total period during which prize availability is restricted may not exceed 90 days in any calendar year. In short, a winner’s right to collect cannot be quietly narrowed after the fact.

Free to refuse

Any competition rule requiring a winner to permit the use of their image, participate in marketing activities, or to attend the draw or winners announcement without opportunity to decline, is invalid.

The winner may refuse to do so and still collect the prize. The brand has no inherent right to a winner’s name, image or likeness for marketing purposes. Consent must be obtained as a voluntary release - one that the winner is free to decline.

When PoPIA applies

Publicly sharing an image is one form of personal information use, but promotions often collect other details along the way. Competition entries typically request personal information such as names, mobile numbers, identity numbers, banking details, and location data too.

Once this information is collected, PoPIA applies. Promoters must collect only necessary information, provide reasons why it is collected, secure it, retain it only as long as needed, and comply with cross-border transfer requirements, where applicable.

Having navigated this terrain, promoters must keep thorough and well-organised records. The CPA Regulations require an independent professional - an accountant, auditor, attorney or advocate - to oversee and certify how the competition is run, and promoters must keep records of the rules, the prizes, the winner selection, declarations of eligibility, and proof of prize delivery.

So, is there such a thing as a free lunch when you win it? Yes. Winners can accept the prize, decline the photograph, and eat in peace. For the promoter, the lunch is free only if the mechanics, consent, data, cross-border transfers, and record-keeping have been addressed before LaUNCH.