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Home | News & events | Legal updates | ‘No purchase necessary’ just became unnecessary
‘No purchase necessary’ just became unnecessary
31 March 2008
The familiar phrase ‘No purchase necessary’ could soon start to disappear from product promotions.
Under the Gambling Act 2005 businesses running free draws and prize competitions will no longer have to offer the ‘No purchase necessary’ entry route which means that producers can limit entry to people buying their products which is good news for retailers and household name brands running consumer competitions.
Historically, the phrase ‘No purchase necessary’ was used to avoid the risk of a prize draw being classed as an illegal lottery. This obliged businesses to open their competitions to anyone, including those who hadn’t bought – or ever had any intention of buying – the product carrying the competition details.
This should encourage companies to begin using competitions as part of their marketing and promotional strategies. Some restrictions do still apply, for example, a company offering the prize of a printer on purchase of one of its computers must not sell the computer at an inflated price. The overriding principle is that competition organisers
must not mislead the public.
There must be a clear distinction between prize competitions and lotteries; where winning a prize competition depends on skill, judgement or knowledge, and winning a lottery is wholly down to chance. A prize competition with an easy answer to encourage more entries, plus an entry fee, will now be classed a lottery.
It means organisers of prize competitions – free of regulatory controls under the Act – must ensure their competition does not fall into the category of public lottery, for which they would require a licence. For a more detailed briefing note on competitions see our update When does a free prize draw become a lottery? – The new Gambling Act 2005
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