Amelia won a car in an online lottery, but it was taken away. Here’s what to look for if you’re entering a raffle

Sharon Givoni Consulting Consumer Law

From buying a raffle ticket in support of your local footy club, or dreaming of winning a multi-million-dollar lottery, trying your luck can be alluring.

But beyond the luck element, there are strict rules across Australia designed to make sure there’s a level of fairness and transparency afforded to those who enter competitions large and small.

The story of a woman who told the ABC how she won a car via a social media competition, only to have it taken away months later, prompted us to ask those in the know about how to better understand what you’re signing up for.

Charity raffle, lottery, competition … what does it all mean?

Business director Andreas Fung works for Trade Promotions and Lotteries (TPAL), a company that helps organisations across the country ensure they’re abiding by competition rules within their state or territory.

He says there are three main types of competitions you might encounter — a trade promotion, a charity raffle or something that is classed as gambling, like buying a lottery ticket — and each has different rules, which can vary between jurisdictions.

“A trade promotion lottery is a free-entry competition,” Mr Fung said.

“The consumer enters an email address, perhaps on a website, and goes in a random draw to win a prize. There could be cash, there could be a holiday, it could be anything really.

“The reason it’s called a trade promotion is because … the aim is to promote your business, basically.”

He said companies can link entries to the purchase of products, but they can’t raise the usual price of those items or services.

“You can’t inflate the product price, because then you’re paying for the entry,” Mr Fung said.

Raffles, where tickets are sold for prizes like cars and holidays, are generally only permitted to be run by not-for-profit organisations such as charities, or community groups like sports clubs.

Other competitions, like high-stakes cash lotteries such as Tattslotto and Powerball, are considered gambling and are subject to tight regulations specific to them.

There is also a distinction between games of chance, which are usually randomly drawn, and games of skill, which may require you to complete a task, like a colouring-in competition.

Different rules are in place for each.

Rise in ‘cowboys’ bending the rules in ‘very grey’ areas

Mr Fung said over the past year or two, more and more people were trying to “bend the rules” for trade promotions by setting up competitions referred to as raffles, sometimes offering low-value items such as stickers or T-shirts at inflated prices or memberships of little value to get around rules prohibiting entry fees.

“They’ve really just bought a ticket for entry,” he said.

“There’s lots of, for lack of a better term, cowboys out there trying to do this.

“A lot of them are unlawful or in an area that is very grey.”

Mr Fung said many operators associate themselves with a charity, but often lacked transparency about how much money was actually going to the charitable organisation.

He said offering up modified vehicles as prizes was a strong trend, and his company received a handful of calls each week from people seeking advice on setting up such operations.

“Our job is to basically liaise with our clients to draft or review terms and conditions for competitions, apply for permits for competitions that are legitimate, get those permits from the government, and perform random draws that are compliant.

“So it’s quite a frustrating thing for us to get four or five phone calls a week from people that are proposing to set this up.”

“We reject the work every time.”

How simple steps can save consumers

The rules around competitions are complex, varying between each state and territory, and with a separate body in each jurisdiction responsible for regulation.

Lawyer Sharon Givoni, principal at Sharon Givoni Consulting, said taking extra care and looking out for particular details and contextual information could prevent people from unwittingly giving money to an illegitimate operation.

These include checking whether the competition is linked to a permit number, reading through terms and conditions that are listed and checking the details of the organisation running the competition with the Australian Securities and Investments Commission (ASIC).

“They can quickly tell you online whether that company is registered or not, because there’s nothing to stop someone from just using any sort of name,” she said.

Ms Givoni said if a large, reputable company was attached to a competition, generally “they’ve got a lot at stake and too much to lose to do it wrong”.

She says consumers should also be sceptical if a company is running a trade promotion type competition but it’s not a charity and doesn’t provide goods and services.

“If it’s not a brand you know, it should be ringing alarm bells and sending up a whole lot of red flags,” she said.

Ms Givoni says checking if the competition rules “look like they make sense” and checking where they will publish the winner is a good idea.

“The other thing you might want to look at is whether they’ve run one before,” she said.

“Sometimes what I do is just a quick internet search of the person running it, or the brand name … and it might warn you in advance if there’s already a problem.”

If someone has entered a competition and later has concerns about its legitimacy, Ms Givoni said depending on the situation, contacting state regulators, consumer affairs bodies or even a lawyer might be necessary.

Shoddy practices can damage public trust in charities

Aside from potentially duping members of the public into entering a competition not properly adhering to the rules, making misleading claims about donating to charities can undermine good causes.

A spokesperson from the Australian Charities and Not-for-profits Commission said although it didn’t have direct power over third-party fundraising for registered charities, a key part of its role was to “promote trust and confidence in the charity sector”.

“If an organisation claims to be a charity, it is important for donors to check the ACNC Charity Register to verify its credentials,” they said.

“An individual can raise funds for a cause. The cause does not have to be charitable and there is nothing wrong with this.

“However, doing checks in these situations can be harder and we urge donors to be careful. Donors can check with the regulator in their state to see whether the fundraiser has a license or permit to fundraise, for example.

“We urge donors to find out as much as possible about the source of the fundraising campaign before donating, using the internet, searching the bona fides of the people or the organisations involved.”

Article taken from ABC News Website. See the Original Article Here: https://www.abc.net.au/news/2023-02-11/how-to-tell-if-trade-competitions-charity-raffles-are-legitimate/101956528.